Money, in brief

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]

Why it matters. 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]

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.