Wednesday, December 2, 2009

How An Interest-bearing Susu Works

If you are participating in a Susu to help out a friend or family member who needs money right away, you’ll probably elect to be at the back end of the Susu. An interest-bearing Susu rewards your patience with a few extra dollars. The interest is paid for by the participants who received their payments earlier in the Susu.

For example, let’s say you are in a five-week Susu with five friends with a $500 payout (you each save $100 a week for five weeks for a $500 payout).

Participant 1 receives $495 because he/she paid $5 in interest for being the first person paid
Participant 2 receives $497.50 because he/she paid $2.50 in interest for being near the front
Participant 3 receives $500 because he/she just happened to be in the middle
Participant 4 receives $502.50 because he/she gained $2.50 in interest for being near the end
Participant 5 receives $505 because he/she gained $5 in interest for being the last person

As you can see from the payments, the overall value ($2500 for the total Susu) doesn't change one bit compared to non-interest Susus. Those in the front are just repaying those at the end for the help they received.

Our Susu gains nothing from the interest – our revenues come from the small administrative fees charged to run the accounts. The interest gained or paid is between the participants and only if your group elects to participate in an interest-bearing Susu. Also note, the interest is calculated prior to any administrative fees.

With or without interest, Our Susu is a great way to save. The interest-bearing accounts add an extra incentive for participants that are near the end of the savings circle and can be compared handsomely to bank rates.

Check out http://www.bankrate.com to get information on interest-bearing accounts and compare rates.

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