Personal Money · Thursday, 3 September 2026

01 Briefing what happened

A bank asks for papers. A savings circle asks the nine people who will see you next week.

Personal Money 1 min 40 sources

Across much of the world, people who cannot borrow from a bank borrow from each other in turns: ten people, ten months, one pot, and nobody charges interest. Lending money is the easy part of lending. Being sure of getting it back is the expensive part, and what a lender can hold on to decides everything about the price.

$1,000

the pot ten people build by paying in $100 a month

one member takes the whole thing each month until every one of them has had a turn [2]

390%

a year, the cost of a two-week $100 US payday loan

the fee is $15, small on its own and enormous once you stretch it over twelve months [5]

98.9%

of tiny loans to people with nothing to pledge, repaid

the lender Opportunity International reported the figure for 2016; the group, not the individual, was answerable [4]

1.9m

adults in Britain who used an unlicensed lender in a year

the country's 350 member-owned credit unions hold 4.9 billion pounds between them and serve about 2 million people [13]

The lead story — what happened

Across much of the world, people who cannot borrow from a bank borrow from each other in turns. Economists call it a rotating savings and credit association. In Ghana and Nigeria it is a susu, in South Africa a stokvel, in Ethiopia an ekub. [1]
The shape is always the same. Ten people put in $100 each month, and one of them takes the whole $1,000. By the tenth month everyone has had a turn. [2]
Nobody charges interest and there is often no contract at all. What holds it together is that the members will see each other again. [2]
The hard part of lending was never handing the money over. It is the risk of not getting it back, and US data on 1.25 million mortgages and 284,914 card accounts shows lenders price closely to that risk. [36]
Banks answer the problem with records: a credit file, payslips, a house they can take back. Market traders in southern Ghana told researchers the bank asks for papers they do not have, so they use their susu. [3]
Where the records do not exist, a lender grabs a substitute. A US payday lender normally runs no credit check and instead takes a post-dated cheque or permission to reach into your bank account. [5]
That substitute has a price. A $100 payday loan carrying a $15 fee for two weeks works out at 390% a year, and extending it costs another $15 while the $100 stays untouched. [5][7]
Group lending turns the same idea into a business. The Grameen Bank in Bangladesh started in 1976 by lending $27 to a group of women with nothing to pledge, and made the group answerable together. [4]
It repays remarkably well. The microlender Opportunity International reported repayment of about 98.9% in 2016, from borrowers no bank would have scored. [4]
The free version has a hard edge. A circle only reaches as far as people who know each other, and one illness or funeral can force a member to drop out and lose months of saving. [1]
When a stranger holds the shame instead, it turns into harassment. Digital lenders in India and China have taken borrowers' phone contact lists and called their friends and family until they paid. [8]
Banks are now trying to buy the cheap check. The US Federal Reserve has set out how the flow of money through an account can stand in for a credit file nobody has. [10]

Who is involved

Susu, stokvel, ekub, tontine

the local names for a savings circle in Ghana and Nigeria, South Africa, Ethiopia and French-speaking West Africa; one arrangement, many languages [1]
Grameen Bank

a Bangladeshi lender, started in 1976, that lends tiny sums to groups of women who own nothing a bank would accept; its model spread worldwide [4]
Mission Asset Fund

a US non-profit that organises lending circles and reports the payments to the credit bureaus, so a circle also builds a credit record [2]
Payday lenders

US shops and websites lending small sums against a borrower's next wage; they skip the credit check and take access to the bank account instead [5]
Community development financial institutions

US lenders the US Congress created in 1994 to serve people banks pass over; their consumer loans typically run 5% to 13% a year [9]

What is pushing on this

Cost of checking a borrower High↓

US regulators call reading an account's cash flow a promising way to score people with no file [10]

Reach of a circle Steady→

it stops at the edge of the people who will meet again [1]

Price paid by people with no record High→

US payday fees run $10 to $30 for every $100 borrowed [6]

Shame used as security Building↑

lending apps have called borrowers' contacts in India and China [8]

How it unfolded

1946 VanCity opens in Vancouver to lend to working people in the east of the city [26]
1976 Grameen Bank lends $27 to a group of women in Bangladesh, with the group standing behind it [4]
1994 the US Congress creates community development banking for people outside the mainstream system [9]
2024 73% of women in low- and middle-income countries hold an account, up seven points in three years; about 700 million still hold none [22]
Now US regulators map cash-flow data onto the parts of a credit score, to reach people no file describes [10]

Where this points

Watch whether reading an account instead of a credit file actually lowers anyone's price: lenders adopting the method is not the test, and a borrower still paying 390% because nobody could check them cheaply is. [10][5]

The rest of the day

39 more stories on this beat.

Each with its own sources. None of these is a link to the story above.

02
Payday fees reach billions a year

Across the 30 US states that allow payday loans, borrowers pay more than $2.4bn in fees a year, on the Center for Responsible Lending's count. A $500 loan at $30 per $100 is repaid as $650 a fortnight later. [6]

Why it matters — A fee that looks trivial per loan is the whole business once you count the loans.
03
Extending the loan buys nothing

Rolling a US payday loan over usually means paying the fee again while the borrowed sum stays exactly where it was: $500 rolled twice reaches $300 of fees on top. [6][7]

Why it matters — The clock is the product. A short term is what turns a small fee into a huge rate.
04
Sixteen US states write in an exit

Payday lenders in sixteen states must or may offer an extended payment plan to borrowers who ask, default, or are about to, the US consumer regulator reported in 2022. [7]

Why it matters — The way out exists only where a legislature put it in writing.
05
Collectors mostly win by walkover

US lenders usually win debt-collection lawsuits because the borrower never appears in court, on a 2020 analysis by the Pew Charitable Trusts, a research group. [7]

Why it matters — Enforcement is cheap when the other side does not turn up.
06
One group of Americans has a price cap

The US Military Lending Act caps the total yearly rate on most credit to serving members of the armed forces and their families at 36%. [19]

Why it matters — A rate ceiling is possible. It was written for the borrowers the state employs.
07
Rates of 440% to 950%, void in 17 states

Golden Valley Lending and Silver Cloud Financial had been offering online loans of $300 to $1,200 at yearly rates of 440% to 950% since at least 2012. The US consumer regulator sued them and two others, saying the loans were void under rate caps or licensing rules in at least 17 states. [20]

Why it matters — Lending online lets a lender sit outside the state whose rules would bite.
08
Credit unions lend it at 28%

US federal credit unions may offer payday alternative loans capped at 28% a year, up to $2,000, with as long as twelve months to repay. [7]

Why it matters — Same borrower, same risk, a fraction of the price, because the lender is owned by its members.
09
Community lenders charge 5% to 13%

Community development financial institutions, created by the US Congress in 1994 for people the banks skip, lend to consumers at typically 5% to 13% a year. [9]

Why it matters — The gap between that and 400% is not risk. It is who is being served.
10
Community lending tripled in five years

The assets of US community development lenders roughly tripled between 2018 and 2023 to more than $450bn; over 1,400 are certified, and each must aim at least 60% of its lending at underserved places. [15]

Why it matters — A rule about where the money must go is what keeps the sector pointed at the problem.
11
A twelvefold plan for British community lending

Campaigners want a British version of the US Community Reinvestment Act, arguing lending by credit unions and community lenders could rise from 250m pounds a year to as much as 3bn. [13]

Why it matters — The alternative to a loan shark has to be big enough to be reachable.
12
US credit unions grew by half in six years

Federally insured US credit unions held $2.43 trillion in assets in December 2025, up more than 48% from $1.64 trillion in March 2020. [14]

Why it matters — The member-owned corner of banking is not a curiosity any more.
13
Nearly everyone banked, a third feeling well

About 96% of US adults have a bank account, up from 92% fifteen years ago, but only around 31% describe themselves as financially healthy. [12]

Why it matters — Having an account and being all right are different measurements, and only one of them got fixed.
14
Nearly four in ten cannot find $400

37% of US adults could not cover an unexpected $400 expense from cash, savings or a card paid off next month, on the Federal Reserve's household survey. [12][10]

Why it matters — This is the demand a 390% loan is priced against.
15
The unbanked are short of the minimum

About 42% of unbanked US households say they cannot keep the minimum balance a bank asks for; banks commonly want $100 to $500 to waive fees of $10 to $15 a month. [11]

Why it matters — The account is priced for people who already have money sitting still.
16
Overdraft fees land on the same people

In 2022, 4% of financially healthy US households paid an overdraft or bounced-payment fee. Among financially vulnerable ones it was 46%, and 65% of those paid three or more times that year. [10]

Why it matters — A fee for running out of money is charged to the people who run out of money.
17
Regulators want lenders to read the account

The US Federal Reserve has set out how cash-flow data, such as overdraft history, deposit size and how long an account has been open, maps onto the parts of a traditional credit score. [10]

Why it matters — It is an attempt to find the people researchers call invisible primes: safe borrowers no file describes.
18
A card limit nobody asked for

Automated increases touch more than 12% of US credit card accounts a year, and a Federal Reserve paper found the ones aimed at people already carrying a balance frequently leave them worse off. [30]

Why it matters — Card profits come mostly from people who never clear the balance, which is who the algorithm finds.
19
Consent rules for credit limits spread

Canada, Singapore and New Zealand restrict raising a card limit without the customer agreeing, and EU member states are due to follow in 2026. [30]

Why it matters — Offering more credit is itself a decision, and some countries now treat it as one.
20
Getting paid electronically makes you lendable

Across 101 economies and nearly 50,000 firms, those receiving payments electronically were about 3 percentage points less likely to be shut out of credit entirely, with the biggest effect on small and young firms. [21]

Why it matters — The payment trail becomes the record the lender could not otherwise get.
21
700 million women hold no account

73% of women in low- and middle-income countries had a financial account in 2024, up seven points from 2021, but roughly 700 million had none at all. [22]

Why it matters — Every one of them is outside the record-keeping that makes cheap credit possible.
22
Half of unbanked women have no phone

Among the 48% of women in sub-Saharan Africa with no account, only half own a mobile phone, so the digital route past a bank branch is not open to them either. [22]

Why it matters — The fix everyone points to needs a device first.
23
Farmers are still paid in cash

57% of farm sellers in sub-Saharan Africa have an account, yet only 25% are paid into one. For women it is 18%, against 30% for men. [23]

Why it matters — Cash income leaves no trace, and a lender cannot lend against a trace that is not there.
24
Africa's instant payments reach 25 countries

25 African countries had a live domestic instant payment system in 2025, up from 20 in 2022, with 19 more building one. [27]

Why it matters — The plumbing that makes a payment visible is being laid country by country.
25
97% of Africa carries no insurance

Micro and small informal firms employ 83.1% of Africa's workforce, and more than 97% of the continent's people hold no formal insurance. [24]

Why it matters — Without insurance, one accident is what forces a saver to break the circle.
26
Small grants beat small loans in the studies

A World Bank review of 27 studies found grants to women's businesses of $85 to $382, median $150, set against microloans typically ranging from $180 to $1,012. [28]

Why it matters — The sums that change a small business are startlingly small, in either form.
27
Most women start a business out of necessity

72.9% of women entrepreneurs in emerging economies said they started from necessity rather than opportunity, against 67.2% of men; in established businesses there are 0.68 women for every man. [29]

Why it matters — Necessity gives you no time to build the paperwork a lender wants.
28
Benin's market traders went digital

In two semi-rural markets in Benin, 80% of food traders are women, 52% have no formal schooling, and 49% now trade using digital tools. Those who did report a 50% rise in both how often and how much they trade. [25]

Why it matters — The trade grew without the bank, and the record it leaves may reach the bank later.
29
The co-operative is older than the app

VanCity opened in Vancouver in 1946 to lend to working people; Mondragon, founded in Spain's Basque country in the 1950s, now employs more than 70,000 across 92 co-operatives. [26]

Why it matters — Owning the lender is the oldest answer to a lender who will not have you.
30
US regulator drops a fair-lending test

In 2025 the US consumer regulator stopped using disparate impact, the idea that a rule can discriminate through its effects rather than its wording, in supervising and enforcing fair lending law. [34]

Why it matters — How discrimination is defined decides which refusals are ever counted.
31
Immigration status changes who will lend

Some US lenders accept a taxpayer number or a work visa in place of citizenship, and the US consumer regulator takes complaints from people who believe they were refused because of their immigration status. [38]

Why it matters — The missing document, not the borrower, is usually what the refusal is about.
32
Building a record from nothing costs a deposit

A US secured credit card asks for cash upfront, often around $200, and that deposit becomes the spending limit. Scores run from 300 to 850, and a payment 30 days late can sit on the file for seven years. [18]

Why it matters — You need money to start proving you can be trusted with money.
33
The loan that holds your money

A US credit-builder loan of $500 to $3,000 works backwards: the lender keeps the money for six to 24 months while you pay, and hands it over only once you have finished. [17]

Why it matters — It is a savings plan wearing a loan's paperwork, because the paperwork is the point.
34
A family loan crosses a tax line at $10,000

In the US, a loan between relatives of $10,000 or more may oblige the lender to charge interest and report it as income, and a gift above $19,000 in 2026 needs a gift-tax return. [16]

Why it matters — The state starts noticing at a number, whatever the two people call the arrangement.
35
A title loan takes the car

US car title loans lend 25% to 50% of a vehicle's value and require that you own it outright. A card cash advance costs 3% to 5% and is capped at a fifth to a third of the limit. [31]

Why it matters — Each of these is a different thing the lender can hold, priced accordingly.
36
Hardship loans run 7% to 36%

US personal loans marketed for a financial setback run from $1,000 to $100,000 at yearly rates of about 7% to 36%, with a setup fee of 1% to 10% folded in. [32]

Why it matters — The spread inside one product is the price of how much the lender knows about you.
37
Small firms turn to lenders charging up to 99%

US small-business owners now apply to alternative lenders almost as often as to large banks. Those lenders' rates run 14% to 99%, against 6.37% to 10.98% at a bank. [35][37]

Why it matters — Speed is bought with rate: approval in a day, at several times the price.
38
Scam compounds now rival the drug trade

Cyber-scam operations in the Mekong countries were earning an estimated $44bn a year by late 2024, and one survey put the average loss per victim at $155,000. [33]

Why it matters — The same absence of records that blocks a loan also hides where a stolen payment went.
39
Half of US households pay outside a bank

46.4% of US households used a non-bank online payment service in 2021, on a count by the US deposit insurer. Women's World Banking reports that women are more likely than men to hold an account that sits unused. [39]

Why it matters — An open account is not the same as a used one, and only a used one leaves a record.
40
The repeat borrower is the business model

Most payday borrowers cannot clear the loan and still meet their costs that fortnight, so they borrow again. A senior policy counsel at the Center for Responsible Lending, which researches lending, calls that cycle the model payday lenders rely on for revenue. [40]

Why it matters — The loan is not priced for one borrowing. It is priced for the sequence.

02 Lesson why it matters

When there is nothing to repossess, the security is a person

Every loan is held up by something the lender can take, and where there is no property or paperwork, that something is other people.

The twist

A loan described as having no security always has security; when there is nothing to repossess, the thing being pledged stops being an object and becomes a person.

How it works

A lender's real problem is not the money, it is being sure of getting it back
Records solve it cheaply: a credit file, a payslip, a house that can be taken
With no records, the lender reaches for something else it can hold
A circle holds your standing with people who will see you next week
A payday lender holds your bank account; an app holds your contact list
What the lender holds, not the size of the loan, sets the price

Where you've seen this

Bail

a court that cannot hold you holds money, or a person who has agreed to lose it

A job reference

an employer who cannot test you asks somebody whose word is worth something

A rental deposit

a landlord with no history of you keeps a month's rent in place of one

Trade on a handshake

in a closed market, being thrown out of it costs more than any single deal

The catch

Standing works as security only inside the circle where standing travels; push it further and it either stops working or turns into calls to your mother.

And the whole of it

Everyone who has ever borrowed handed something over as security, and most never saw which thing it was. A mortgage is a house, an overdraft is the day your wages land, and a savings circle is every person in it, which is also why nobody in the circle can see how much of it rests on them.

03 Truth what's really going on

What is really going on

The price of a small loan is mostly the cost of checking a stranger and chasing them, and the cheapest way to do both has always been a group of people who cannot avoid each other.

Why it works on us — A charge quoted per fortnight reads as a fee and the same charge quoted per year reads as a scandal, and it is the same $15.

Who gains

Payday lenders in the US states that permit them — They take more than $2.4bn a year in fees on loans that need no credit check, because reaching into the borrower's bank account does the work a check would. [6]
Whoever draws an early turn in a savings circle — The first to take the pot has borrowed for months and paid nothing; the last has lent for months and been paid nothing. [2]
Credit bureaus and the non-profits that feed them — Organisations such as Mission Asset Fund turn circle payments into reported records, which is the product they exist to make. [2]
US card issuers raising limits automatically — Most card profit comes from people who never clear a balance, and the automatic increases reach more than 12% of accounts a year, aimed disproportionately at exactly those people. [30]
Digital lenders holding a borrower's contact list — Collection costs almost nothing when a lender can call and text the borrower's friends and family until the money arrives, as lenders in India and China have done. [8]

Who pays

US households with no credit file — With nothing cheap to check, the loan on offer is the one secured on a bank account, at around 390% a year. [5][10]
Market traders in southern Ghana — The bank asks for papers they do not have, so the money available to their business is whatever their circle can raise between them. [3]
Financially vulnerable US households — 46% paid an overdraft or bounced-payment fee in 2022, against 4% of financially healthy ones, and 65% of those paid it three or more times. [10]
A circle member hit by illness or a funeral — Missed contributions can wipe out months of saving, and the strictest circles are the least able to bend when income drops. [1]
The friends and family listed in a borrower's phone — They receive the calls and messages a lender uses to shame the borrower into paying, having agreed to nothing. [8]

What nobody knows yet

Open questions from across today’s stories — ours included.

01

How many US states actually allow payday lending.

Two explainers published within a year of each other give different counts. Investopedia says 37 states allow the loans; Bankrate says 30. Neither publishes the list it counted. [5][6]
02

What a credit union's payday alternative loan can actually be.

One US source describes $200 to $1,000 over one to six months, another up to $2,000 over twelve. The rules cover more than one product and neither says which it is describing. [5][7]
03

How many people are inside savings circles worldwide.

There is no count. The arrangements are informal by design, frequently have nothing written down, and reach official data only when a non-profit organises them. [1][2]
04

Whether reading an account instead of a credit file lowers anyone's price.

The US Federal Reserve sets out how cash-flow data maps onto the parts of a score, but publishes no figures on what the people scored that way end up paying. [10]
05

Whether 98.9% repayment describes the lending or the reporting.

The figure is one lender's own for 2016. The same account notes microcredit going on day-to-day spending rather than businesses in parts of South Africa, which the repayment number does not show. [4]
06

How often a savings circle collapses, and what it costs the members.

The World Bank account describes members losing months of saving after an illness or a funeral, and says rigid circles bend worst, but gives no rate of failure. [1]
07

How much of Britain's unlicensed lending a bigger community sector could absorb.

Fair4All Finance counted 1.9 million adults using unlicensed lenders in a year; the campaign for a lending law offers a range of 250m pounds to 3bn, with nothing on the overlap. [13]

04 Hope carry this

The first Grameen loan, in 1976, was $27 shared between a group of women in Bangladesh who owned nothing a bank would accept as security. They repaid it.