Posted by William Charles on July 28, 2014
Manufactured Spending

Published on July 28th, 2014 | by William Charles


Manufacture Credit Card Spend With Kiva

Kiva is a microfinance platform and non profit that allows lenders to match up with borrowers in the third world. Unlike other microlending platforms such as LendingClub & Prosper lenders do not receive any interest on their loans. PayPal have partnered with Kiva and allow you to fund your account with a credit card, PayPal does not charge any fees to Kiva for this service.

Because of this, some people use it to manufacture credit card spend and to meet their minimum spend requirements to trigger credit card sign up bonuses. Here are the basics:

  • Lend as little as $25
  • Kiva currently has a 1.1% default rate
    • Some people will obviously have a higher default rate and some lower. We will look at ways to lower our default rates below.
    • This rate has been steadily rising.
      • 1.01% in November, 2013
  • Paypal waives all credit card processing fees to Kiva, so there is no additional cost incurred for Kiva by funding with a credit card.
  • Once repayments are made you can either reinvest your money or withdraw it to your paypal account (which can then be withdrawn to your bank account)

Funding your account

  • Sign up for if you don’t already have an account
  • Choose the loan you want to fund
  • Select the amount you want to fund it with
  • Check out
  • Click “don’t have a paypal account” (choose this optional even if you do, otherwise you won’t be able to fund with a credit card)

Choosing A Loan

Each loan has a little story about what the loan is for and a picture of the person or people receiving the loan. Kiva also provides a whole heap of other metrics to help you choose which loans to fund.

  • Repayment term: This is the amount of time between the loan being disbursed to the borrower and when the last repayment is due. It’s important to note that it takes time for projects to become fully funded and disbursed to the borrower, so if the repayment term is 7 months it might take 8 months or longer for you to receive full repayment (assuming the borrower doesn’t default). It’s important to look at the disbursed date to find out if if the loan has been pre-disbursed or not. The shortest repayment term is 6 months.
  • Repayment schedule: How often repayments will be made (either monthly, at end of term or irregularly)
  • Disbursed date: This date indicates when the borrower will receive (or has received their funds)
  • Listed: This is the date that the loan was listed on Kiva.
  • Currency Exchange Loss: This can have three possible options:
    • Covered: The field partner will cover any losses due to currency fluctuation
    • Possible: The field partner has opted not to cover losses on the loan due to currency fluctuation. When losses of 10% or greater are incurred you the lender will be responsible for these losses.
    • N/A: Loans are given in USD and as such there is no currency exchange risk.

Maximizing your profit

If you’re going to make a profit from Kiva then you’ll need to earn more in credit card rewards points than the interest you could have earned in a high interest savings or checking account (these are currently sitting around 1%). It’s also important to remember that your “investments” with Kiva are not liquid and should be in addition to an emergency fund you have set up. There is also risk involved with these loans, do not loan money you can’t afford to lose.

  • Look for loans that are unlikely to default/become delinquent. In the advanced section there are a number of ways of doing this.
  • Look for short repayment terms, the shorter the loan the sooner you can withdraw your funds and then reinvest using additional credit card funding. This also reduces the opportunity cost associated with not having these funds in an interest bearing checking account. It’s possible to sort loans by repayment terms by clicking “Sort by:” then “Repayment term” in the drop down menu.
  • Look for a disbursed date is as close as possible. This ties in with the repayment terms, the closer the disbursed date the sooner you’ll get your funds back (assuming no default).
  • Currency exchange loss that is covered or N/A. This removes any element of risk that you’ll loose money due to massive currency swings. You can view loans that don’t have any currency risk by clicking “Advanced options” then unchecking the currency risk box at the bottom.

If you want ever more control on what you can filter or search by, we recommend using:

My Final Thoughts

I’m personally not a fan of Kiva or their business practices, I think they give lenders a warm fuzzy feeling whilst the borrowers on the ground are charged extremely high predatory interest rates (to give you some idea the average interest rate was 35.21%, Kiva no longer seems to publish this rate) . A lot of people will argue that if they didn’t lend on Kiva the borrower either wouldn’t have access to capital or would be charged even higher rates.

My counter argument is that there are competitors to Kiva that don’t engage in the same business practices. They aren’t as well known and don’t allow credit card funding but at the end of the day I give to charity to try and make as much of a positive difference as possible.

I also don’t think this is a particularly effective way of generating a lot of credit card spend. I know there are a lot of lenders on Kiva that will disagree with me, but when you take into account the illiquid nature of Kiva loans and the default risk the return is really not that great. There are some exceptions e.g, when you’re meeting a minimum spend requirement or using a card that earns at 5%+ on charity contributions but these are exceptions rather than the rule.

Before using Kiva, I’d recommend doing some additional reading:


Does funding Kiva with a credit card count as a charity?

This will depend on the credit card you use, Paypal should have the correct merchant category code set for these transactions so it should code as a charity.

What credit cards earn at a high rate on charity contributions?

You can find a full list that is kept up to date here.

Can I use gift cards to fund Kiva? 

Yes, split transactions will not work though as far as we are aware. As such the minimum you can fund is $25. If you repeatedly do this you will run into issues as paypal wants your name to be embossed on any cards used for credit card funding.

Will Kiva/Paypal shut me down if I withdraw and add funds to often?

Kiva obviously doesn’t want to burn their bridge with Paypal and as such if you withdraw funds too often, only to immediately fund again with a credit card you can run into issues. Travel with Grant ran into this issue and somebody from Kiva has to now manually send out his payments via Paypal which can add another 2 week+ delay.

Can I also claim this as a tax deduction?

No, loans funded on Kiva are not a tax deduction. When you check out there is an option to donate money to Kiva itself for it’s operational expenses, this is optional and is tax deductible.

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Thanks for the mention, Will. The biggest issue I have with Kiva is that you have to float the funds for 3-12 months, or longer. I don’t want to tie up funds for months/years since I don’t have a big enough savings. I can MS the same $1,000 several times per month without tying up funds for a long time. Just my 2 cents.

Grayson @ Debt Roundup

That is an interesting way to manufacturer spending, but I wouldn’t want to put out funds on a loan just to get credit card points. I used to fund loans through Kiva and there were times I wouldn’t get my money back for 12 months. I think that is too long to float.


[…] 3x points on these purchases/donations. This is somewhat important as it’s relatively easy to manufacture spend with Kiva (although there are some risks and ethics […]


Just as an update to this thread, I’ve done thousands on Kiva so far, usually unloading VGCs purchased at a discount from the office stores since the groceries and Walmarts in this area look askance at split payment. My general tactic for withdrawal is to wait until a calendar month is over and most of the payments have posted, and then fund a day or two before most of the payments come for the following month, usually in the middle. If you request on average one or less withdrawal a month, you shouldn’t have issues. I never log in to Paypal when making contributions.


Nice old post!

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