What Is a Tandas?

What Is a Tandas?


An organization known as a tanda is a rotating savings and credit association (ROSCA) that was created by a group of acquaintances with the intention of aiding one another in saving money for a larger objective, such as an interest-free loan or significant purchase. The group meets frequently to agree upon a sum of money to be put into a pool and distributed to one of the members.

Main Points

  • A tanda is a revolving savings and credit organization for a group of friends or family members.
  • The group members get together frequently to put money into a pool that is then distributed to one of them.
  • Tandas provide early beneficiaries with something akin to an interest-free loan.
  • Tandas can also be employed by those who find it difficult to save money to motivate them to do so.
  • In developing nations, tantas are more prevalent and are known by a variety of names.

Tanda Definition and Illustration

Mexico, where nearly a third of the population participates in a money-pooling group, is where the word “tanda” originates. It is a ROSCA for a group of individuals who are well acquainted. A tanda typically consists of friends or family members who can count on one another to always contribute their fair share of the money, even after they have received their own payouts.

Ten friends and family members, for instance, might decide to contribute $100 each each month for ten months. In one of those months, each tanda member would receive $1,000.

In developing nations or among immigrant populations in more developed nations, ROSCAs are more prevalent.

Alternative names: A tanda is known by a variety of names around the world, including cundina (in northern Mexico; tanda is more frequently used in central and southern Mexico), hui (in Vietnam), paluwagan (in the Philippines), asusu (in Benin), esusu (in Libya), and susu (in Tobago). 2.

In India, a concept known as a chit fund is also very similar to the tanda. 4.

How Do Tandas Function?

The tanda decides on the total amount, frequency, and duration of payments that will be made by all of the participants. The payment schedule may be predetermined in advance, or everyone may opt to choose a member at random to receive the money each week. 1.

A tanda functions as a brief, no-interest loan for those who get money early in the cycle. It’s a method for those who get payouts in the middle of the cycle to plan and accumulate funds for a significant purchase. It exerts social pressure on people who are at the end of the cycle to continue saving money. 3.

You don’t have many options if you don’t receive your full expected payout because tandas aren’t governed by government regulations and are typically set up by an informal agreement.

Tandas’ alternatives

You can create a payout structure by using some common banking features if you want to save money and get some of the benefits of a tanda but don’t have access to one or don’t think it’s right for you. You could, for instance, open a savings account at a bank and set up automatic deposits on paydays. Some banks, especially those that only operate online, pay 1% or more in interest yearly.

Although you may need to reach a certain balance to get better benefits, like the highest interest rate, many banks don’t have minimum balance requirements to open a savings account.

Online money circles or pooling services, made popular by the now-defunct EMoneyPool in the early 2010s, provide something akin to a tanda but with additional security measures that are common for online commerce. 5 Yahoo had an application called “tanda,” but it was short-lived (only a few months), while MoneyFellows and crowdfunding forums fared better. 6 Although the operation of each online money circle or money pool may differ slightly, at their most basic level, they charge a small fee in exchange for the assurance that, in the event that one of the participants in your pool fails to make their payments on time, the service will cover your payout.

For a spot in a circle with a five-month time frame, MoneyFellows, for instance, charges a fee of 6%. Depending on where you are in the payout schedule and how much you engage, the fee decreases over time. You’ll pay the lowest fee if you can wait until the very end of the payout schedule. 7.

Tandas’ advantages and disadvantages


  • Helping friends and family has social benefits.
  • Payment errors are uncommon.
  • Numerous online options with additional security.


  • Possibility of not getting paid.
  • Loss of trust among friends or family members could result.
  • Online versions have costs.

Pros Explanated

Helping friends and family has several social advantages: The social component of a tanda is one of its main advantages. Many people discover that attending weekly or monthly meetings with their tanda group helps to fortify these already-existing connections. A tanda can be a useful tool for people to borrow money from trusted sources without paying interest or other fees, as well as for friends and family to assist a loved one who is in need.

Payment errors are uncommon: Missed payments are extremely uncommon in almost all tandas. This is so because breaking a promise can have a significant negative social impact. Professor Carlos Velez-Ibáez of Arizona State University discovered that the nonpayment rate was 0.005 percent after looking at 130 ROSCAs. 3.

Online choices provide additional security: Online money circles are a way to take part in money-pooling groups with greater protections in place than can be found in tandas, if you are concerned about the lack of a guarantee that you will receive a payout.

Cons Described

You run the chance of not getting paid: Since tandas are unregulated and based on social contracts, there is no legal recourse if the group members fail to make their payments as agreed.

Possibly results in a lack of trust between friends or family members: Whether or not you trust the people in a tanda and how you handle these interpersonal relationships may be the most important things to consider before joining. It might be a good idea to start out small if you have never taken part in a tanda or if you are joining one with a new group of people who aren’t your close friends or family. You run the risk of offending people you care about if you can’t make the payments on time.

Online versions are paid for: You’ll probably have to pay for it, at least for a few months, if you prefer the security of an online tanda or money circle.

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