When Latines Can't Trust Banks, They Form Lending Circles Called "Susus"

Tanda. Pawdna. Quiniela. Rotativo. These words represent a chain of trust and familiarity that, despite being associated with different cultures, all refer to the same thing: informal savings clubs or circles that function as a way to not only save money but to gain more in the short term. Sometimes called sociedades or susus in the Caribbean, the concept is simple. Rather than put money away in a savings account, a group of family, friends, and/or neighbors agree to put a designated amount of money into a community pot. At the end of the designated period (usually every week for 10 weeks), the lump sum of the savings is given to one of the members of the susu to do with it as they see fit. The next week, everybody puts into the pot again, and it is awarded to the next member in line, and so on and so forth.

While these kinds of sociedades are common among immigrant communities around the world, the word susu comes from the Yoruba word esusu, which denotes an informal money-saving practice. As one might imagine, this practice, along with a sense of community trust, was spread throughout Latin America and the Caribbean through the slave trade. Nonetheless, similar practices can be found in other cultures and countries, including in China and Korea.

The reason for this cross-cultural popularity is that susus function as a simple solution for a common problem: a lack of financial security. Those who leave their home countries under less-than-ideal circumstances, crossing border after border in search of a better life, often fall into this category. When they arrive, they can sometimes struggle to establish themselves financially.

One of the major hurdles faced by not only Black and Brown communities, but underserved communities in general, is a lack of familiarity with and trust for the financial system," says David J. Cuevas, a Puerto Rican financial adviser. Cuevas also notes that there are certain operational hurdles intrinsic to the banking system that might make it difficult for members of these communities to establish a banking identity. "Anytime you go to establish an account at any bank, we need to collect certain proofs, such as proof of identity and proof of address. And in particular, proof of address tends to be one of the biggest challenges," he says.

Cuevas explains that while there are no immigration-related barriers for nonresidents to open a checking or savings account if they don't have a sufficient amount of proof of residence under their name (utility bills, phone bills, etc.), they won't be able to complete the process. This can make traditional banking a challenge for those who are new to the country.

Alternatively, susus provide a way for the most vulnerable in our communities to access quick cash when they need it. Upon joining, the members of the susu are given a number or a ticket. For those with lower numbers (usually the susu managers, members who join early, or those who take on some responsibility related to the group), the susu functions like a loan, rewarding them with a large lump sum that they then pay back over the ensuing weeks. For those with higher numbers (those who are newer to the community), the susu is more like an informal savings account, where they can put money into it early on to cash out later in the year. In both instances, it can be an important financial crutch for members of underserved communities.

Jonas Guerrero, the product line manager for Ewing Athletics, grew up calling the practice "sociedad." He remembers it playing an important role in his humble childhood.

"My dad was a cab driver, so a lot of [our sociedad] money was allocated there. There was always something going on with that car," Guerrero says with a laugh. This is a reality that many working-class people understand. However, Guerrero adds that along with unforeseen expenses and major bills, susu earnings often financed vacations or trips back home. For those who might not have access to credit or don't want to take on more debt, they can simply plan their trip around when their number is coming up in the susu. There's a sense of certainty there. The members know when their number will be called, and they know how much they stand to make.

It's this certainty that allows the susu to keep its appeal, even when mobile banking is making things more convenient than ever. Immigrant communities have always relied heavily on a kind of seniority — members who were the first to make the trip helped those who came after to find their feet and learn the ropes. Susus or sociedades, along with providing much-needed financial support, are crucial to establishing and maintaining a sense of community in new surroundings. For Guerrero, the appeal of susus can be summed up in a single sentence: "I don't know if I can trust the banking system, but I know I can trust Ana," referring to his mother, Ana Guerrero, who managed a few of her own susus.

"She did it for over five years but stopped because it was getting to a point where she was having to travel to collect the money, oftentimes spending her own money in the process," Guerrero explains.

This was before the time of Cash App or Zelle, so collecting sociedad money meant trekking all over the city. But it went further than that; if one of the members was short on their contribution, that money came directly out of his mom's pocket.

This is the risk that comes with running a susu. The manager has to front the money for any members that don't put up. As one can imagine, in a system designed to help those lacking financial stability, this extra money can end up being a big burden.

There's also the risk of managers running away with the pot. Coupled with a concerted effort by banks to educate and make inroads into Latine communities, these are some of the reasons susus are becoming a bit rarer these days. Throughout Cuevas's 15-year banking career, he's been a part of initiatives that specifically target Latine communities, and he is quick to point out that susus and traditional banking aren't mutually exclusive. In fact, in his experience, many of the susu managers will hold the cash collected from the pot in traditional savings accounts.

Part of the reason these two systems can function concurrently is because they tend to serve different purposes, with traditional savings accounts being used in a more general way while susu earnings might be allotted to more specific expenses or purchases.

However, just because susu earnings are usually used as a way to offset financial hardship doesn't mean that always has to be the case. In a time when mobile banking and mobile investing are par for the course, it's not a stretch to think that susu earnings could be used to help members of the Latine community dip their toes into investing. Cuevas agrees.

"Whether it's a susu or Bitcoin, they're both financial tools," he says. "And at the end of the day, just like any tool, if you use it the right way, you're going to see some sort of benefit."

Miguel Machado is a journalist with expertise in the intersection of Latine identity and culture. He does everything from exclusive interviews with Latin music artists to opinion pieces on issues that are relevant to the community, personal essays tied to his Latinidad, and thought pieces and features relating to Puerto Rico and Puerto Rican culture.