How To Use Your Savings To Make a Difference


Ok, I know I’m super late to the game here but I just recently joined Kiva. A friend of mine recommended it, having been using it for years and having only good things to say. After some investigating, I went ahead and signed up.

Kiva is a charitable peer-to-peer lending platform, that lets you loan money to borrowers across the globe to help them start businesses, attend school, and improve their lives. You make 0% on the money — they simply pay back what they owe you — but it has a hugely positive impact on their life (and yours!), and you can wiggle a 1%+ return in another way, which I share below.

Note: This post is about Kiva, but the following information and strategy is true for any charitable peer-to-peer lending platform that operates in a similar way. Likewise, even though this post is focused on Kiva, it’s only because it is the platform I am using. This is not a sponsored post and I am in no way affiliated with the brand. 

I set up a regular contribution of $75 USD/mo to Kiva from my credit card. Since I’m now venturing into self-employment, I’ve lowered it to $50 USD/mo until my income stabilizes, but I think that’s still quite a bit to start making a difference!

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I’m looking forward to re-lending my money as its paid back, and being able to say I’ve helped someone in each of the 82 countries in which Kiva operates. Right now, my loans are being credited to Team Canada, but maybe we can get a team Money After Graduation going?

I love to support causes I care about

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So far my donations on Kiva have primarily been to women needing loans in order to fund education or entrepreneurship. Ya’ll know I can’t say no to a woman with ambition!

Screen Shot 2015-11-08 at 5.27.52 PMBeing able to choose exactly which individual your money goes to, makes you feel more connected to your cause than simply giving money to a charitable organization and having them disperse it as they see fit. This is not to say charities typically use money incorrectly, but merely to point out that having 100% say in where the cash goes is  a special gift. I love using my money to help others, but even more so when I can see it in tangible ways. Putting a real face and a story to the person I’m helping makes me feel like I’m really making a difference, not just throwing cash into the abyss and hoping it makes its way to a good cause.

Set up an automatic monthly contributions through your credit card to earn rewards points or cash-back.

I have a credit card that gives me travel rewards points that essentially work out to 1% of every dollar I spend. This means I’m essentially making a 1% “return” on my monthly donations to Kiva, which I make through my credit card. Ironically, this is higher than the 0.80% currently being offered by savings accounts at my bank, which almost makes it seem like we’re in a place where spending money is better than saving it. Ha!

Setting up a regular, monthly charitable contributions (to Kiva or another charity of your choice) through your credit card is an excellent way to get the most out of your donations.

But lending through Kiva isn’t the same as spending money, because you can always get your money back out after the loans are repaid. In other words, you’re earning credit card points on money transfers rather than spending.

This acts like a creative no-interest savings account.

Once your money is in Kiva, you loan it to different borrowers in increments of $25. The borrower will begin repaying you within ~2 months. The typical loan repayment timeliness are usually one year, but they can range from only a few months to over 3 years, depending on the needs of the borrower. You can see the term of the loan and repayment schedule before you donate, so there are no surprises.

As your loans are repaid, you can decide if you want to use the money to fund another loan, donate it to Kiva, or withdraw the money back to your own bank account. To maximize credit card rewards,  you can elect to withdraw the funds after they’ve been repaid, and then put them back into Kiva — essentially double-charging your credit card for the same $25 to get twice the points (this seems like too much of a headache to me, but if you can get 1% cash-back on the same $25 every year, why not).

Unless you’re donating the repayments to Kiva, this is less a charitable endeavor than it is a very creative alternative way of saving, but that doesn’t make it any less valuable. Maybe you can’t afford to give $25 or $50 per month to a charity right now, but CAN afford to put that money in a place where it can do some good while you don’t need it!

Because you can’t access your money when it’s lent out, this is obviously not a great place to keep something like an emergency fund, but any other cash that you can handle waiting a few months to a year to have access to, this might be a worthy place to put it. When it comes to building long term wealth, you should have your money diversified in a number of different savings and investing vehicles to meet your goals, and Kiva can be a great piece of that puzzle. Because you can’t touch the money when it’s lent out, it can actually discouraging you from spending savings you would otherwise drain for an impulse purchase.

Watch your money make a difference.

In addition to the repayment, Kiva provides regular updates about the progress and accomplishments of the borrower your money went to, which lets you see your savings in action! Seeing your money do some good for someone else, and then still receiving it back to use for yourself is really getting the most bang for your buck.

Screen Shot 2015-11-08 at 5.21.30 PMFull transparency: the loans you’re funding through Kiva have, in most cases, already been dispersed to the borrower. You’re essentially back-filling the funds. The date the money was dispersed is listed on the profile of each borrower.

Over time, you will lose money with Kiva.

Sometimes, the borrower you donate to is not able to pay back the loan they borrowed. However, since you’re only loaning the money out in $25 increments, the risk of losing all your money is very, very low. The overall repayment rate to Kiva is over 98%, but that’s still enough that, with time, your overall balance will go down at a rate of approximately 1.5% per year. But since you’re making >1% in cash-back or rewards points on your credit card for your donations, you’re not walking away nothing!

In a world where most financially-savvy people are crying over their bank’s pitiful interest rates, I can understand that a negative return of 1.5% is probably difficult to get used to. It’s important to remember that the point of your wealth is not to extract every penny possible in interest and dividends, but to use it in a way that has a meaningful impact on your life and the lives of those around you.

I think the personal finance community can get a little crazy chasing pennies and cheering about saving $4/month on their cable bill or whatever. While its important to never pay more than you have to for something, I would strongly discourage you from making your entire life about scraping by on as little cash as possible. You have a lot of time, talent, and money to go around — so start giving!

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16 Comments. Leave new

  • Beautiful post Bridget, and you have inspired me to set up my own Kiva account! Thank you 🙂

  • We use Kiva in my World Culture/Social Studies class. I have the kids research based on the current continent we are studying, and then we make a class donation (it’s my money…but whatevs). It’s SUCH a powerful lesson for them. It’s really helped them to shift their perspective of other people.

  • Kiva is very, very cool. My family often gives Kiva loans as gifts (i.e. I donate $25 in honor of my mom and she gets to decide who the money goes to). To be honest, I’d never thought of it in terms of the credit card points, but that’s a nice bonus!
    There are definitely more important things in life than saving $4 on your cable bill. I think it can be hard to remember that when you’re really focused on saving and/or getting out of debt. We could use more reminders like this in the pf community. Thanks, Bridget!

  • Love this 🙂 I put $25 into Kiva when I was in university (sooo… 8 years ago?) and I’ve been lending and relending the same $25 since then. It doesn’t take a lot of money to make a big difference in someone’s life.

  • I received a gift of a loan (very similar to Kiva) in my name from my aunt & uncle last Christmas. I was in awe & it felt amazing to see that! To know that I wasn’t receiving a tangible gift, and that the money they would have spent on me was going towards funding micro-businesses in another country was a wonderful feeling. Thank you for this reminder, Bridget! I now want to look into this – and what perfect time right before the holidays. 🙂

  • I’m new to your site; really like the clean layout. It’s very admirable to help the people out that need it the most. Keep up the good work!

  • If you avoided using your credit card you would help more. Kiva probably pays Visa 2% of how much you give them so you get a 1% back. Isn’t that how it works?

  • Hi Bridget,
    I was wondering, do you include the money in your Kiva account in your networth calculations?
    Because it is indeed a kind of creative savings account, but it’s not 100% sure you will get all of it back. Wondering what I should do…

  • I’ve just started doing this too and super excited to see someone else doing it as well!

  • I like Kiva but the money is in USD so unless your savings are in the same form, you will likely lose money (25% currently)? I invested in some at this current value but it would make more sense to wait for the dollar to jump a bit. I couldn’t wait; it’s too addictive! I did set a limit, but I am excited to reinvest in July and after.

  • First of all let me tell you that your blog is fantastic, I subscribed to your emails a few months ago and they have provide me a lot of help and guidance. In one of your emails you included a link to this post. This post has encourage me to do the same, sometimes I spend more in a Starbucks in a month instead of applying some of your savings tips and put back into organizations that are doing great job around the world. One question, when I visit Kiva is particular group you belong to that I can join to participate or any other group you can recommend?


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