Pardner – If you are wary of traditional banks and financial institutions, you can still find ways to save. We are going to explore a saving method that may be new to you but can be amazingly effective. You may have heard of the pardner system. It is a financial mechanism that allows you to save and is based on trust among the participants or members. It is known by different names depending on where you live in the world. However, in the United Kingdom, it is often referred to as a partnerhand.
Let’s explore what it is all about.
How Does The Pardner System Work?
What makes the pardner system so noteworthy is its simplicity. The official term for the system is a rotating savings and credit association. A pardner works when a group of people decides to collect a predetermined contribution and place it into a pool. This amount is collected each week or month. All the monies collected are then given to one of the participants.
This amount is called a “hand”. This process is repeated for each of the participants. The person who is in charge of the pardner is called the banker. This person collects the money. The pool of money is called the draw. This money is paid to the participant whose turn it is to collect.
Let’s discuss in terms of an example.
12 persons decide that they will participate in a monthly pardner beginning in January 2021.
The banker will usually ask each participant which hand they would like to have. The first hand would be paid at the end of January. The last hand would be paid at the end of December.
The pardner system is considered both a loan and a savings program. The person who chooses the first hand has in fact taken a loan. They are paid the amount upfront and then pay the monthly installments for the rest of the year. The person who takes the last hand has created a saving. They have basically saved the money bit by bit until they are paid the lump sum and the end of the year.
Do You Pay Interest In A Pardner System?
No, you do not pay or earn interest if you join a pardner or susu.
How Is Money Collected In A Pardner?
If you join a pardner, the entire group decides when the “hands or lump sums will be paid out. pardner payments can be disbursed annually, monthly or weekly.
What Is The Pardner System Called In My Country?
The pardner system has been utilized all over the world but it is often called by different names depending on your geographical location. The word “pardner” is the Jamaican terminology for the informal financial system. Here is a guide of the different names for the Pardner system around the world:
Jamaica- Pardner or Panda
West Africa- Susu, Sou Sou or Osusu
Africa (in general)- Likelemba
Latin America/ Mexico- Tanda
South Africa- Stokvel
Pakistan – Committee or Quiniela
El Salvador and Guatemala- Cuchubales
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Who Usually Joins A Pardner?
Historically, low-income earners have utilized the pardner system. A participant would usually join in order to fulfill a short-term financial goal that would ordinarily be unattainable. However, anyone can form or join a pardner!
The members of the pardner also usually know each other or they may have a connection in the group. A participant may vouch for someone’s trustworthiness.
What Are Pardner Hands Used For?
Pardner hands are usually used in the following scenarios:
School/ university fees
A participant would usually choose the hand that coincides with the financial commitment.
Are there any rules that I should know about?
The pardner system being an informal mechanism has very few rules. However, all participants are asked to make their payments on time in order to facilitate the payment of the hand that is due. The banker may give you a note stating by what date your contribution should be paid and the hand ( first, 2nd, etc) that you picked.
If you choose a particular hand, there is an understanding that this agreement would be honored. However, if one of the participants has an emergency, he or she may ask another participant to swap hands. If the participant is amenable, this request may be accommodated.
Does The Banker Get Paid?
Historically, the banker is not paid to run the pardner. However, on rare occasions, this has occurred. Generally, people frown upon a banker who demands a fee. They view this as a distasteful request.
What Are The Advantages Of The Pardner System?
The pardner system is advantageous for a number of reasons:
-There is no formal vetting system to become a member or participant. You can start one with your family, friends, or workmates. Or someone you know can vouch for you in their pardner or susu.
-There are no fees. Other than your contribution, you do not have to pay anything else.
- If you take the first hand, you have basically acquired an interest-free loan.
Are there any disadvantages?
Of course, no financial system is perfect and there are risks. Here are some factors, you should be aware of:
-There is always the chance that participants will be unable to make their payments on time. They can be risky. There have been instances that members have lost their money. Scenarios can start out quite well with you trusting the banker and the other participants and things can still fall apart.
-You need to bear in mind that pardner schemes are not monitored by any financial regulatory body. So, the money that you contribute to the pool is not insured.
-This scheme does not pay interest like other savings providers and regulated banks. As such your money will suffer the ill effects of inflation.
-You have no access to your money until your turn for your hand rolls around. If there are several members in the pardner scheme, it may be a while before you see any money.
So as you can see, the pardner system does have its virtues. If you are looking for a simple way to save money, feel free to look into the pardner system. It may be the opportunity that you have been looking for.