What a lending circle is, and how to run one fairly
In the United States and Canada, a lending circle, money circle or savings circle is a rotating savings group. A fixed group of people who know each other pay the same amount on a set schedule, and each round one member receives the whole pot, until everyone has had a turn. Immigrant communities brought the idea with them, and most still call it by the name from home: a tanda, a sou-sou, a partner, a sòl or a committee.
There is no interest and no return. Whoever receives the pot early gets money up front and pays it back through their later contributions; whoever receives it late is simply saving. Everyone pays in the same total and gets the same total back once.
Is a lending circle the same as a savings circle?
Among relatives, neighbours and co-workers, yes: both words describe an informal group that keeps its own record. In the US, “lending circle” also has a second meaning. Some nonprofits, such as Mission Asset Fund, run lending circles based on the tanda in which each payout is a zero-interest loan and members’ payments are reported to the credit bureaus.
Savings Circle is not that kind of program. It does not lend money, it does not report anything to credit bureaus and it does not build credit. It is the record book for a circle you run yourself, with people you know.
What do different communities call it?
Almost every community in the US and Canada has its own word for the same system:
- Tanda or cundina among Mexican and Central American families across the US (see the tanda guide), san among Dominicans in New York, New Jersey, Boston and Florida, and cuchubal among Guatemalans and Salvadorans.
- Sou-sou or susu among people from Trinidad and Tobago, Grenada, Guyana and Ghana, and in many African American families (see the susu guide).
- Partner or pardna among Jamaicans in Toronto, New York and South Florida, where each contribution is a “hand” and the payout is the “draw” (see the pardner guide). Guyanese call it box hand, and Bahamians say asue.
- Sòl among Haitians in Miami, New York, Boston and Montreal, and tontine among West and Central Africans in Montreal and Ottawa-Gatineau (see the tontine guide). Cameroonians also say njangi, and Moroccans daret.
- Committee, kameti or BC among Pakistani and Indian families (see the committee guide), and paluwagan among Filipinos (see the paluwagan guide).
- Equb among Ethiopians and Eritreans, hagbad or ayuuto among Somalis, ajo or esusu among Nigerians and chama among Kenyans.
- Jam’iya in Arab communities, hui among Chinese families, hụi among Vietnamese families and gye among Koreans.
How does a lending circle work?
- An organizer invites a fixed group of people they know and agrees with them the amount, the schedule (weekly, every two weeks or monthly) and the number of turns.
- Each member gets a turn, which decides when they receive the pot.
- Every round, each member pays the organizer, in cash or by bank transfer, Zelle, Venmo or Cash App.
- The organizer hands the whole pot to that round’s member, and the circle ends when everyone has received it once.
For example, ten people paying $100 a month make a $1,000 pot each month for ten months. Each person pays in $1,000 and receives $1,000 once; only the timing differs.
How is the order of turns decided?
Most circles either draw the order at random in front of everyone or agree it together, often giving early turns to members with an urgent expense. The draw only decides who receives the same payout first, so nobody wins anything. Whatever the method, agree it before the first payment and write it down, because arguments about who was supposed to go first are hard to settle later.
What goes wrong in a lending circle?
- Someone stops paying after receiving the pot. The members with later turns lose out, which is why organizers only invite people they know well.
- Late payments hold up the next payout and put pressure on the organizer to cover the gap.
- Disagreement about who paid. Payment screenshots get buried in group chats, and a notebook is hard to check months later.
- Scams that borrow the name. Pyramid schemes dress up as savings circles. The Illinois Attorney General and the Better Business Bureau have warned about schemes called “boards”, “blessing looms” and “sou sou”, and in 2021 the FTC and the state of Arkansas acted against a “Blessing Loom” scheme that promised returns as high as 800 percent. A real circle has a fixed group of people you know, no recruiting, no interest and no returns.
How do you run a lending circle with Savings Circle?
- Create the group. Pick a name type, such as “Savings circle”, “Tanda” or “Susu”, and give the group any name you like, such as “Lending circle – Queens”. Then set the currency, what each person pays per round and the schedule. US dollars are supported; if your circle runs in Canadian dollars, check the currency list first.
- Add members from your contacts. They don’t install anything.
- Set the order. Run a random draw in front of everyone, or enter the order you agreed. A random draw saves its seed, so anyone can check later that it wasn’t changed. Members can ask to swap turns, and the swap is recorded too.
- Record payments as they come in, by cash, bank transfer, Zelle, Venmo or Cash App, with a screenshot as proof if you like. It works offline and syncs later.
- Remind the late ones. One tap opens WhatsApp, SMS or Telegram with a polite message, sent from your own phone.
- Record each payout. Every entry is dated. A correction is added as a new entry, and the original stays in the history.
You can share receipts and statements with members, and use Savings Circle on Android, on iPhone, on Apple Watch or in the web app at app.savingscircle.app.
Savings Circle never holds or moves money. Members pay each other the way they already do; the app is the shared record of who paid, who is next and what is owed.
It never lends money and it does not report to credit bureaus, so taking part in a circle you run with it will not change anyone’s credit score.
Other names for the same idea
Outside North America the same system is a committee in Pakistan and India, a susu in Ghana, a chama in Kenya, an arisan in Indonesia, a paluwagan in the Philippines and a junta or pasanaku in Peru and Bolivia. Economists call all of these rotating savings and credit associations, or ROSCAs. Savings Circle works for any of them.
What is a money circle?
A money circle is the English name for a rotating savings group: a fixed group of people who know each other pay the same amount on a schedule, and each round one of them takes the pot. It is the same kind of group as a lending circle or savings circle. Savings Circle keeps the record of who paid and who is next.
Guides
- South Asia: committee, kameti, chit fund, bhishi, kitty party and samity
- Africa: susu, chama, ajo, adashe, equb, hagbad, stokvel, tontine, mukando and chilimba
- The Americas and the Caribbean: sou-sou, tanda, junta, lending circle and pardner
- Asia and the Pacific: arisan, paluwagan and hụi
- The Arab world: jam’iya