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I’ve been lending money on Kiva for almost two years now. For those who don’t know, Kiva is a microlending site that allows you to loan people money to fund a business. For us, we can loan that money through a credit card or prepaid card via Paypal. I don’t use it extensively but use it a fair amount to meet minimum spending on several credit cards. I was quite hesitant in using Kiva, but so far I have a perfect record on Kiva. As of this date, I have invested in over 136 loans and have been paid back 100%. Although Kiva states their default rate is about 1% on total loans, I have yet to experience any loss in investment.
I usually use Kiva’s filtering site Kivalens to pick my loans and look for a quick repayment term as well as a good partner field rating. I’ve set my partner field rating at about a 3.
After selecting a few loans, I pay with a credit card or prepaid gift card via PayPal. Prepaid gift cards work just fine and PayPal even has a prepaid gift card option so it seems that they are okay with it.
I tend to liquidate my AMEX gift cards I buy on Bigcrumbs using my Barclaycard Arrival or AMEX SPG when I don’t have minimum spending to complete. Using this strategy, I receive Bigcrumbs cash back and points. Of course I’ll have to wait at least 5 months to get my investment back, but I can help someone else and earn points/cash back in the meantime.
The downside to Kiva is that you have to float your funds around for a few months. However, if you can get 2.2% back in points every 6 months I would say that is a pretty decent annual rate of return given that the current interest rates are quite low. I’m not saying Kiva is for everyone, but based on my perfect record on Kiva, it’s working just fine for me.