Wednesday, March 6, 2013

Kiva Loans - Credit Card Points for Free and Still Feel Good About Yourself?

Kiva Loans - Credit Card Points or Cashback for Free and Still Feel Good About Yourself?

Disclaimer - The Discover offers are no longer valid.

Update 5/6/13 - You can try Kiva with $25 free which can be used to make a loan.  Once it is paid back, the money should be yours to keep.  I have been using Kiva for about 4 months with a 0% default rate.  I always pick my loans based on loans that others from Mile Point have already invested in.

Kiva is a company that provides microfinancing around the world.  The basic idea is that many people provide loans in $25 increments that will provide one person with a loan of a few hundred or a few thousand dollars.  Group funding for people in poorer countries.

Kiva does not provide the lender with any interest on this loan so you will be paid back only your $25 (or $50, etc.) so it kind of makes you feel good that you are helping people start their own business.

Here's the selfish part:

Kiva loans can be funded via paypal, which means that the loans can be funded via credit card.

Most loans are paid back monthly and once you have been paid back $25, you are able to start the cycle again by relending that money.  Instead, you can also withdraw the money to paypal and from paypal to your checking account and fund your new loans via a credit card again.

The Fidelity American Express gives 2% cashback everywhere so you can potentially get 2% back on all of your loans and you also get your initial investment back as your loans are paid back.

I used my  Discover it™ this month because I get 5% back on all online transactions until the end of the year.

For example, if I am willing to lend $12,000 total, I can lend $1,000 every month and by the end of the year I will be getting $1,000 a month in repayments while lending a new $1,000 via credit card.  That's 1,000 points for free every month!

You can also use Kiva to make sure you hit your spending thresholds for bonuses when signing up for new credit cards.

What's the catch?

There is most definitely a catch here.  Borrowers can default on their loans and you could lose your investment.  That being said, the current default rate is 1% on average, which means you still should be making some money.  The more you lend to more sources, the more likely you are to be around the average.

Even more selfish part

When you invite someone to Kiva, you will get $25 towards a new loan or $25 free, so I would certainly appreciate you signing up through my link ;)

If you sign up, invite others and you will get the $25 bonus too.