Digital money pooling app Tanda targets millennials for short-term savings goals.
Yahoo Finance has launched a money app that allows groups of five or nine people to contribute towards a short-term goal in a collaborative savings circle, for amounts starting at $250.
Users can join public circles, with everyone participating paying a fixed amount into the circle’s pot every month. Once a month, one participant gets to take home the full pot, but with some catches: the first two positions in the circle to take their pay-out pay a small fee, and the last position receives a cash bonus.
Users can also take part in private circles with their friends, but an invite is needed to join. In order to take part on Tanda, each user is assigned a Trust Score based on their history of making contributions on time. Higher scores allow users to participate in larger money pools, but if contributions are late, users will lose points and have their account suspended for a time.
Tanda is also working in partnership with e-commerce platform Dwolla to vet users before they join, planning to reach profitability through fees gained through circles rather than turning towards mainstream banking products.
This is not the first time that social savings have appeared in fintech. Recently deceased UK savings app Folio included a social pots feature for savings between friends, which might suggest something about the future of Yahoo Finance’s Tanda.
However the US might prove a more fruitful market for Tanda. Yahoo says the app is designed to help millennials achieve their financial goals without racking up more debt through the interest rates often included by US credit companies.
“We are a prosperous country,” said Simon Khalaf, head of media business and products. “We have to solve the savings problem.”
According to a report by the Federal Reserve, many Americans are drowning in credit card debt, paying interest rates of 19 per cent or higher.
Tanda will be available in the US this week on the iOS app store and Google Play, released in Spanish and English.