Many or all of the companies featured provide compensation to LendEDU. These commissions are how we maintain our free service for consumers. Compensation, along with hours of in-depth editorial research, determines where & how companies appear on our site.
The savings app Tanda, offered by Yahoo, has been discontinued.
How does it work? During the saving period (typically two weeks or a month), everyone puts the same amount of money into the pot. At the end of the month, only one person gets to take home that money. The goal of Tanda Savings is to motivate yourselves and your friends to save up a significant amount of money, and to use social pressure to keep you saving consistently.
The Benefits of Tanda Savings
If you’re struggling to save money, anything that can help you put dollars aside is useful. Tanda Savings takes a completely different approach compared to most savings apps. It allows you to save money with five or nine other savers. You can either let Tanda join you with other savers, or you can create a private circle of your own and invite friends and family.
You all commit to putting a certain amount of money each month into a pot under the expectation that your social commitment to do that will ensure you honor it.
But rather than taking your share of the pot home at the end of the savings period, you take turns taking the full amount. You might wonder how this would work and how members decide who gets the pot when.
The app motivates people to wait for their monetary rewards. The first way Tanda does this is requiring that the first two people who take the pot of money pay a fee, while the last person to take the pot gets a 2 percent bonus. Users can input how long they’re willing to wait and the program slots them into different waiting positions.
This way, people who have a greater immediate need for cash can choose one of the initial payouts, while those who can wait are able to choose a later payout.
This works in some ways like a credit product since many participants will get the full savings amount before they’ve put the full amount into the pot themselves. If they have a need for money immediately, they can access cash without using a credit card. If they get one of the first payouts, they won’t be charged interest, but they will pay a fee and they will need to keep paying into the pot until everyone gets paid.
How can you trust someone on your team to keep making contributions after they get their cash? As you participate in Tanda groups, you’re given a Tanda score that allows you to gauge whether the people in your group are trustworthy or not. As your score increases, you’re also able to participate in savings circles with higher goals – up to $2,000 per month.
What happens if someone backs out anyway? The good news is that Tanda will cover their missed contributions.
The app is aimed at a millennial audience who might struggle with money. Its goal is to help them access a form of credit that won’t get them embroiled in high-interest credit card debt.
The Drawbacks of Tanda Savings
There are a number of drawbacks involved in the Tanda Savings app. One of the big ones is that once you put the money into your savings circle, you can’t access it until it’s your turn for the payout. If you suddenly experience a financial emergency, instead of going into your savings account for the cash you need, you’ll have to wait until it’s your turn to get the money. If your turn isn’t for a while, you’re out of luck.
Another downside of Tanda is that it could lead to fights with friends or family. Ever heard of the adage that you should never lend money? Even if Tanda covers your friend, if they decide to flake on making payments, it could still lead to fights within your group.
Finally, it’s important to note that by using Tanda instead of a low-interest credit product, you won’t be building your credit score – something that’s particularly important for the young millennials the app is targeting.
The Bottom Line
If you’re struggling to save money and tend to be motivated to do things through the buddy system, then you might benefit greatly from using Tanda. It can help you save money consistently and keep you accountable.
But the problem is that the money you save won’t always be accessible to you – which could lead to financial problems if you experience an unexpected expense or financial emergency. For that reason, there might be better ways to save money.
Author: Jeff Gitlen