Travel Rewards card (Flexperks) offering 3x points for charitable spend (Kiva)

Discussion in 'Kiva | Loans That Change Lives' started by hobo13, Sep 15, 2012.  |  Print Topic

  1. hobo13
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    hobo13 Silver Member

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    Many of us got the US Bank Travel Rewards card which offers 33xxx bonus points for $2500 in spend during the first 5 months. US Bank has been crappy, but there are threads about that..... anyway, I got the card, and several family members did as well.

    This morning I read on a blog that US Bank is offering 3x points for charitable spend. And a couple bloggers have confirmed that Kiva counts. So if you do $2500 'spend' at Kiva, you'd get 7500 points, in addition to the 33xxx signup bonus. This is significant, as the Flexpoints award chart is quantized, and the next tier is 40,000 points. Moving from the 30,000 tier to the 40,000 tier is worth an additional $200 in rewards.

    So, my purpose in posting this is that I'm considering lending $2500 through Kiva. I originally opened a Kiva account when MP offered the $25 match. I had a good experience, but haven't really done much since. I basically know how Kiva works. I know there is risk. Some may say that funding Kiva with $2500 just to meet a CC spend target is lending for all the wrong reasons -- hopefully others will be happy to have another big Kiva lender on the MP team. In my eyes, it's a win-win for me and the people Kiva supports. Maybe it's a loss for US Bank and Paypal..... I don't really care.

    I read that Kiva has a 1.14% default rate. So I should expect to lose $30 for each $2500 lended. Since I earn an additional $200 for 'spending' $2500 and getting the bonus points, that's roughly a 600% expected return. My goal then is to get the 1.14% expected default rate. I'm fine with that. What should I read and study to insure that happens? How to I reduce the variance on the expected return?

    And yes, if I lose the entire $2500, so be it. It won't kill me. I'd rather lose $2500 to Kiva than to the stock market, and as you can see, I think I have a better RoR in this case! I believe in 'Go Big or Go Home'.

    With all that said, tell me what I'm missing and what else I need to consider. Thanks.
     
  2. harvson3

    harvson3 Silver Member

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    I personally have no objections to people making Kiva loans for supposedly "wrong" reasons. As long as your reason is legal, it's fine by me.

    Some caveats and recommendations:
    1. Diversify your loan portfolio. Make 100 $25 loans rather than 5 $500 loans. Make loans of varying duration to multiple field partners. Loan to men, women, and groups. Know that there's no significant statistical relationship between loans that are about to expire (after 30 days on the site) and default rates. Help save some loans from expiration.
    2. Play nice with Kiva. Withdraw only at limited intervals, if you must. Re-loan the payments that come back to you. Paypal covers the processing fees for Kiva payments. They do this because of social ties between Kiva and Paypal staffers. These fees cost Paypal thousands of dollars. Paypal will stop helping Kiva (and put a warning on your account) if they think that people are abusing the privilege. Some lenders on the Milepoint team withdraw and add large amounts, but they're also personally in contact with Kiva staff when they do so.
    3. You may have to space out your $2500 transaction into multiple payments over multiple days. Sometimes Paypal doesn't let me add too much, or use a particular card. YMMV.
    4. Do some research into field partners' history and rates of default and deliquency. This information is made available on each borrower page. Some borrowers are more trustworthy than others.
    5. Beware that loaning on Kiva becomes addictive for some, and you might soon find yourself adding credit to and from multiple accounts.

    My personal default rate is below 0.5%, and some on the Team have 0%.

    [written from the office while wearing my MPKLT t-shirt]
     
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  3. hobo13
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    hobo13 Silver Member

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    Thanks for making many good points. Yes, I plan to make lots of $25 loans, thus lowering the variance. I was curious to see if there was an 'auto-loan-picker' that would automatically get me some random diversified portfolio. But I don't see one. That's OK, my wife enjoys picking loans on Kiva, so I'll just have her do it.

    I'll be careful about adding and withdrawing funds so as not to cause too much scrutiny. Thanks for the tips.
     
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  4. HaveMilesWillTravel
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    HaveMilesWillTravel Gold Member

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    I have a portfolio that's similar in size to your expected portfolio, and I have picked most of my loans by hand (searching around on Kiva site) or based on recommendations from fellow MP team members here.

    There are tools like KivaLens (http://www.kivalens.org/) to help you identify loans based on your own criteria. And the Kiva site has an auto-lending tool: https://www.kiva.org/portfolio/credit/auto-lending I haven't personally used it, but have a look at what it's offering. Personally I like to read the story of a borrower.

    I am of course using points/miles earning credit cards to fund my Kiva account via Paypal. About once a month, to meet the needs of my goal of one loan per day for the rest of the year. I do use repayments to fund loans, so the amount of new money needed is slowing down for me. No need to feel bad about the points you're earning, IMO.

    I have no plans currently to withdraw funds. No losses so far (I started in June) but my delinquency rate is 0.3% so far. I can live with that.
     
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