I’m really excited about this particular post because it brings me feelings of nostalgia from home as I relish on its digital potential. As a teenager, I loved the idea of a tanda because it wasn’t limited to age or another qualification that’s usually needed at banks. I find this decentralization trait to be a common trait in Bitcoin as I learn more about it, which could be one more reason for its appeal to me.
If I had to describe a tanda, I’d describe it as a zero interest lending program with your friends or family, but this description doesn’t do it justice. I’ve witnessed my family and friends gain the ability to pay off loans, save for vacations, and save for down payments by participating in tandas. Aside from the physical savings, participating in a tanda built participants’ reputation, financial security, and trust all while keeping the Mexican nature of socializing alive.
Here’s how a short tanda works: Five family members, friends, or co-workers get together, and each person agrees to give a $1o0 every week (usually cash) for the next five weeks. The group then designates a group coordinator which is responsible for collecting and distributing the tanda money. At the end of the first week, one group participant ends up with the entire $500. This continues for 4 more weeks until everyone gets the sum of the money they put into the pot. By the end, you can see that every participant pays the same amount and gets back the same amount, with no interest.
Why does it work? Think about it. You’ve made a commitment to your peers and no one wants to lose the trust of their friends or family. There’s a heavy amount of peer pressure involved, but I’ve witnessed bonds grow tighter as multiple tandas are entered over the years.
Is it risky? Yes, but it still works. I asked my step-mom from Chiapas, who frequently organizes tandas, if she’s ever scared a participant will run off with the money. She said absolutely, but the trust within friends and family outweighs any risk factors. If you ask me, failing your friends and family would be a higher interest paid than any financial interest possible.
Mexicans don’t like doing things alone and frankly, why do we have to? We have something powerful, trust. Tandas are effective. For a people that have not been served well by financial institutions, this system provides financial freedom and accomplishment in community-banking. Tandas helped our parents pull through all sorts of financial situations. A trusted method, I look forward to exploring tandas in a digital way for our generation.