Kiva is a clearing house for microlenders to help them find funding for microloans. You don’t earn interest on these loans, but this can be an interesting way to accumulate spend on reward cards without fees…
Coffee Break: Doing good and earning points with Kiva microloans
(00:10) – Kiva is like a clearinghouse for microlenders to help them find funding
Read more about Kiva loans here.
(01:05) – You choose which loans to fund and how much to fund. (You do not earn interest. At best: 100% of money back.) But you can pay with credit card with no fee!
(03:06) – How much $ can you float? (And how long can you float?)
(03:55) – No guarantee of pay back
(04:33) – Avg default rate: 1.82% (mine: 1.73%)
(05:36) – Tool to make it easier to find safe loans: KivaLens
And read about updates to KivaLens here.
(06:13) – KivaLens gives you an ability to filter loan types
(07:21) – KivaLens also gives you an ability to sort
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Music Credit – Beach Walk by Unicorn Heads
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You guys are egregiously misrepresenting the cost of using Kiva. Savings account rates are an easy 4% these days. Assuming a 25% income tax on that interest and the ~2% default rate you mentioned, putting money in a Kiva loan costs about 5%. Plus I imagine there’s some skewness in the default risk: on average you lose 2%, but occasionally you lose 100% if a loan defaults.
If you believe in the charity aspect, great.
But if this is about MS, then a risky 5% is one of the costliest techniques out there. Including various other “pajama spend” like reselling gift cards or loading Gift of College at their site with a 3% fee.
From the miles and points standpoint, it is most useful for meeting credit card spend requirements quickly for sign up bonuses. You don’t ever lose 100%, because you divide up the loans among different recipients. For example if needing to spend $3000 to reach a SUB, you will probably lend, for example, $100 each to 30 different people, and it only takes a couple of minutes to diversify in this way. It truly is much faster than any other type of MS I know of. I tend to pick projects in countries I will soon be visiting, or which I visited recently. Just did some loans in Togo earlier today before I saw this blog post.
With hand-picked loans approach you can certainly do much better than ~2% default rate. With 166K lent since 12/2020 (shortest term loans) my current default rate is 0.68% and delinquency rate is only 1.53%.