Using Kiva to manufacture spend
Nov 30, 2013, 11:00 pm
#106
Join Date: Oct 2012
Posts: 970
This may be a bit OT, but reading the explanation of how Kiva works reminded me of a discussion a friend and I had about Zidisha.
Note:
(Zidisha is an alternative microfinance lending program that is peer-to-peer, as opposed to Kiva, where there is a local intermediary. Lenders can set an interest rate and earn that interest. You can fund via Paypal with credit card, subject to Paypal fees, but you can earn that back on your interest.)
The discussion boiled down whether Kiva was really helping these people out, as opposed to Zidisha where both lenders and borrowers benefit - the lender earns money while the borrowers gets a reduced interest rate as opposed to going through a traditional microfinance lending program.
Anyone have insight on the merits of one versus the other? Why would a borrower go through Kiva instead of Zidisha? Does Kiva serve a niche of the truly underbanked that Zidisha cannot reach?
Sorry for the long post! I'm considering doing some MS through this route, but am not sure that Kiva is the best there is.
Note:
(Zidisha is an alternative microfinance lending program that is peer-to-peer, as opposed to Kiva, where there is a local intermediary. Lenders can set an interest rate and earn that interest. You can fund via Paypal with credit card, subject to Paypal fees, but you can earn that back on your interest.)
The discussion boiled down whether Kiva was really helping these people out, as opposed to Zidisha where both lenders and borrowers benefit - the lender earns money while the borrowers gets a reduced interest rate as opposed to going through a traditional microfinance lending program.
Anyone have insight on the merits of one versus the other? Why would a borrower go through Kiva instead of Zidisha? Does Kiva serve a niche of the truly underbanked that Zidisha cannot reach?
Sorry for the long post! I'm considering doing some MS through this route, but am not sure that Kiva is the best there is.
Heck, the interest rates are so low on Kidisha that I suspect the majority are simply using the money to relend to others at much higher rates.
For MS, stick with Kiva. They are well funded, and if you are careful, you can pick short duration loans (and if you know how to do it, can get almost instant repayments - not surprising that the biggest "lenders" tend to have the shortest duration loans). The problem with Kiva is they don't like MSers. They'll lock your account if you do too much lending/withdrawing and rather than seeing automatic transfers, you'll end up having to manually request repayment.
Frankly, Kiva is a silly way to do MS. There are much safer/faster methods - and many are low/negative cost. No need to tie up $ for months waiting for repayments to arrive.
Dec 1, 2013, 6:53 am
#107
Join Date: Aug 2009
Location: RDU
Programs: A few
Posts: 5,499
Of course they are, there is absolutely no other way this works. I have said that many times here but it's like trying to walk into a Baptist church in rural Georgia on a Sunday morning and convince everyone that God doesn't exist. Kiva has a cult following of true believers that somehow what they do is "doing some good". Mostly rich Americans looking for some easy wealth-guilt-relief I guess. The only thing I disagree with in your statement is that the rates are outrageous. If investors are still losing 3% of their capital through this scheme, then they are not charging enough interest. If you want to be charitable, just give the 3% to an organization that actually does some genuine good, and if you want to be a lending entrepreneur find a program where you can actually get a return on your capital. I don't think the two mix very well at all. And even for generating miles if you are losing 3% of your spend, you are better off just doing google wallet for 2.9% and not having to wait 6 months to lose your money.
Dec 14, 2013, 9:14 pm
#108
Join Date: Aug 2001
Location: SFO
Programs: AC SE, AA EXP MM, UA Gold MM, Hyatt Glob, Marriott Titanium, HH Dia, IHG Plat
Posts: 4,777
Using the US Bank FlexPerks card at Kiva will yield a return of up to 6% on airfare, with no reload/gift card fees. That seems hard to beat, even if you assume a 1% loan loss. Am I missing something?
Dec 14, 2013, 10:26 pm
#109
Join Date: Oct 2009
Location: Land of the parrots and parrotheads
Programs: Several dozen
Posts: 4,820
Up to a theoretical 6%, but Flexperks will rarely yield 2% to make that work. Figure 1.8% x 3 or 5.4% as an upper limit. Also, consider you will be locking money up far longer than BB, PPDC, BUXX or etc. Risk is real - my participation (to no surprize) is way above average with 100+ loans so I am seeing many delinquincies. Chose loans wisely - some regions are riskier than others, as are some of the business ventures. My favorite country to date is Paraguay and my favorite ventures are food or clothing merchandising.
Last edited by AlohaDaveKennedy; Nov 25, 2014 at 12:32 pm
Dec 14, 2013, 11:22 pm
#111
Join Date: Apr 2000
Location: Fort Myers, FL
Programs: Hilton Gold, SPG & IHG Plat, & every airline program that I can join
Posts: 2,279
I have had over $26K in loans to Kiva over the past few years and currently have around a $5K balance. I have had the best luck with Mongolia cab drivers, the worst in Kenya and Samoa. If you invest right before the loan expires it will refund to your account, but they do not really let you withdraw those funds, they usually go back to the method of payment. After a lot of payments pile up, I will make a withdrawal and then go back in and make a new investment. I works for me, and I have had really good success. It sure beats microplace, as that is for a fixed term up to 3 years!
JudyJFLA
JudyJFLA
Dec 14, 2013, 11:38 pm
#112
Join Date: Nov 2012
Location: NYC
Posts: 398
Actually this I disagree on ... see what they have done here that is very "clever" is to make it look like you are lending directly to some individual in some stricken country and you can do it interest free and the default rate is almost zero. I work in finance and this is where my spidey-sense went tingling. There are very few entities with a default rate close to zero. As Europe is learning, not even most sovereign entities have that kind of credit-worthiness. So what they do is they effectively lend out a much smaller amount, at high interest rates, and the default rates on the actual end loans are likely through the roof. I mean Wilma in Sudan borrowing $1,000 to make mats is not a sure-fire loan. But they make enough in interest and on those that do pay back, plus the fees they no doubt make (I think more likely the local orgs not Kiva itself which I am guessing has honorable intentions) means they can always afford to pay back the dollar lent close to whole. So everyone thinks they are doing basically charitable, risk free lending. It is frankly marketing genius.
By doing this they vastly increase the amount of money pouring in. That may well be a good thing. Imagine if you really were lending directly to Wilma in Sudan at 40% interest rates. The forums here would be awash with stories of how someone made out like a bandit, has made a fortune, along with other tales of how Wilma pissed it all down the drain and they lost everything and this is no better than the Nigeria money laundering scam. No they smooth out all those ups and downs at the local level so the middle class guy in middle America can do this and feel real good and comfortable about himself.
With that said, if your aim is really just to meet CC spend, then maybe it's fine. The risk of default probably really is quite small. I'd rather screw over Wells Fargo than Wilma in Sudan but hey we all pick our poisons.
By doing this they vastly increase the amount of money pouring in. That may well be a good thing. Imagine if you really were lending directly to Wilma in Sudan at 40% interest rates. The forums here would be awash with stories of how someone made out like a bandit, has made a fortune, along with other tales of how Wilma pissed it all down the drain and they lost everything and this is no better than the Nigeria money laundering scam. No they smooth out all those ups and downs at the local level so the middle class guy in middle America can do this and feel real good and comfortable about himself.
With that said, if your aim is really just to meet CC spend, then maybe it's fine. The risk of default probably really is quite small. I'd rather screw over Wells Fargo than Wilma in Sudan but hey we all pick our poisons.
Dec 15, 2013, 12:47 am
#113
Join Date: Nov 2012
Location: NYC
Posts: 398
Dec 15, 2013, 7:32 am
#114
Join Date: Aug 2009
Location: RDU
Programs: A few
Posts: 5,499
Getting 5x on tens of thousands of dollars per month is my way of taking money back from a few too-big-to-fail banks. I guess it's not really screwing over Wilma in Sudan lending to her at 40% because she really has not much alternative, but I just think I'd rather give my money to charitable organizations that do more to actually help build economies, and do my MS through more transparent methods.
Nov 21, 2014, 8:15 am
#117
Join Date: Jul 2013
Posts: 85
It's the other really popular US Bank card (5/2/1 tier rates), and yes, 2 k per quarter? I haven't gone done this path yet, as honestly, I haven't had the opportunity to pursue this venue. You can only get the credit card if you sign-up in branch, according to FW.
Nov 24, 2014, 3:54 pm
#119
Join Date: Apr 2000
Location: Fort Myers, FL
Programs: Hilton Gold, SPG & IHG Plat, & every airline program that I can join
Posts: 2,279
I still do Kiva loans often, Usually I use what ever card is having a spending bonus at the time, or need a certain amount for the extra 10,000 miles in a year like Delta. Many more are getting refunded these days for not making the total before expiring. I guess they need more promotion now that Oprah is not around!!
Cheers!
JudyJFLA
Cheers!
JudyJFLA
Nov 24, 2014, 6:26 pm
#120
Join Date: Aug 2006
Posts: 756
Also, does anyone know if Kiva accepts the Amex gold charge card?