Remember Your Mom’s ‘Tanda’? Young Latinos Are Giving It a Tech-Savvy Twist

As a result of the unexpected expenses, he fell behind on rent and utility payments, even though he was working three jobs — as a DJ, an Uber driver and as a construction worker.

But Carrillo got a boon at just the right time: in January, he received $900 in his bank account, which helped his family cover some of the funeral expenses. That was thanks to his tanda, a community-based lending circle, in which members contribute small amounts of money regularly — in his case, $150 each month — and take turns receiving a lump-sum payout.

“That’s how we help each other,” Carrillo said.

A tanda is a centuries-old financial system widely used across Latin America that functions as a community-based savings-and-lending circle. The system relies on trust among its members — usually small groups of six to 10 — and has historically operated in cash, similar to an interest-free savings plan or an informal loan.

Today, however, tandas are becoming more modernized, with apps and other tech tools drawing in younger generations of Latinos. And as California’s cost of living continues to increase, more people are turning to tandas as a way to get out of a tight spot, to save money and build credit.

“It is very expensive to live in these areas,” said Mariel Hernandez, a spokesperson for Bay Area nonprofit Mission Asset Fund. “California’s affordability crisis has made predatory lending more dangerous and more tempting at the same time.”

Her organization partnered with the Education and Leadership Foundation, based in Fresno, more than three years ago to expand access to these traditional lending circles.

Both nonprofits use the model as a way to help communities build savings and access small, no-interest loans through structured, community-based programs.

But Raúl Hinojosa-Ojeda, a professor of Chicano studies at the University of California, Los Angeles, said the origins of tandas go back centuries.

“They’re not new,” Hinojosa-Ojeda said. “There’s multi-thousand-year-old roots of communal labor in Mexico, there’s 1,000-year-old roots in Asia of communal work and communal savings and lending.”

Hinojosa-Ojeda said tandas made their way to California in the 19th century, when immigrants from China and Mexico brought the collective savings practices to the state.

Traditionally, participants knew each other; they were family members, neighbors, friends, and coworkers. Trust is essential within the tanda because a person is less likely to take the money and never return.

In the systems operated by the Education and Leadership Foundation and Mission Asset Fund, participants are strangers, and they no longer operate with cash. Instead, they use an app.

And the organizations are able to guarantee funding if a person drops out.

“The concept is very similar,” Hinojosa-Ojeda said. “People join, and then they agree to deposit money into a fund that’s controlled by a trusted body.”

Hernandez said community members turn to tandas for any number of reasons, including household emergencies or securing a down payment for a home or for rent. She uses tandas herself and said she’s received $1,200 that helped cover the tuition costs of her master’s degree, as well as her Bay Area apartment.

“It can be for buying back-to-school supplies, sending money to family abroad, sometimes it’s even covering quinceañeras,” she said.

When 24-year-old David Medina was feeling the pressure of the holiday season late last year, he realized he didn’t have enough money to buy gifts for his family.

“And then I remembered, ‘Wait, I’m about to get my money from the tanda.’ That money can go straight into my Christmas shopping,” Medina said.

He had been paying $100 a month and received $1,000 just before the holidays. The timing helped turn a stressful situation into a manageable one.

“That money that I didn’t know I had put aside, I had it, and it worked perfectly,” he said.

With the extra cash, Medina was able to buy gifts: toys, new clothes, household items, and food. It helped his family enjoy a more comfortable Christmas.

Carmen Cardenas, the community engagement coordinator for Education and Leadership Foundation, joined a tanda to celebrate her 24th birthday.

“When I received the loan, I wasn’t wanting to go into credit card debt for my birthday celebration, so I saved the money that I got from the lending circle to put it towards that,” Cardenas said. “I was able to use that money and then keep paying it back as the lending circle went on.”

She makes it a priority to participate in tandas whenever the opportunity arises, viewing them as an important way to manage her finances.

Through the Mission Asset Fund app — which is now available through partnerships in Illinois, Michigan, Minnesota, Mississippi, New York and Washington — Cardenas is instantly alerted whenever a scheduled payment is processed, allowing her to track when money has been automatically withdrawn from her bank account.

Meanwhile, Medina has grown to love tandas — not just because he can save money along the way, but also because he’s actively building and strengthening his credit score through the Mission Asset Fund’s app, too.

“After college, I didn’t really build my credit,” Medina said.

After receiving his last payout, he signed up for another tanda and is set to collect $750 later this year — again with the ability to track and access his payments instantly from his devices.

The ability to build credit scores also interested Carrillo, not for himself, but for his 18- and 20-year-old sons.

“In this country, you move forward with credit; without credit, you don’t,” Carrillo said. “Everything relies on credit.”

It’d be tempting to lean on credit to keep up with California’s rising costs, but Carrillo said the tandas have helped him manage it. And, when tragedy struck, the tanda was there with quick cash and zero debt.

“I thank God because it arrived at a time [of need],” he said.