Rotating Savings Clubs: How a ROSCA Actually Works — and Where You Stand

Before your turn you're lending. After your turn you owe. Almost nobody sees the switch.

By the Namup team · Updated July 2026

You're in a savings club. Depending on where your family is from you call it a susu, a committee, a pardna, a tanda, an ekub, a stokvel, a hui, a jam'iyya (rendered committee in Gulf English) — or a daret. Twelve people, the same amount every month, and each month one person walks away with the whole pot. You've been paying in without thinking about it. And if someone asked you right now — does the group owe you money, or do you owe the group? — you'd hesitate. That's not carelessness: nothing shows you. This article answers that exact question, and the only other one that really matters: what happens when someone stops paying.

What a rotating savings club is, in one sentence

A group of people who know each other contribute the same amount at regular intervals, and the entire pot goes to a different member each round until everyone has had a turn¹. Economists call it a rotating savings and credit association — a ROSCA — and it turns up on every continent under different names: tontines in Senegal, chit funds in India².

Nothing is charged for waiting and nothing is paid for patience: in the most widespread form — where the order is fixed in advance or drawn by lot — everyone puts in the same and takes out the same². Hold on to that, because it's what makes a savings club readable: across a full cycle, you never pay more than you receive.

It is not a pyramid scheme — and the difference is structural

Worth settling early, because it's the first worry people raise. A pyramid scheme needs a constantly growing base of new recruits to pay the people above them, and it collapses the moment recruitment slows. A savings club is closed and finite: a fixed group, a fixed number of rounds, and every member receives the pot exactly once. Nobody profits from anyone else's arrival, because nobody new arrives. That's a different structure, not a gentler version of the same one.

The part nobody tells you: you switch sides

Here's what makes a savings club genuinely hard to read, and it's precise: you don't hold the same position from start to finish.

• Before your turn, you've paid in and received nothing. The group owes you that money. You are, exactly, a creditor.
• In the month of your turn, you receive the whole pot — far more than you've paid in so far.
• After your turn, you keep paying for a pot you've already collected. You are now a debtor to the group, and what you owe shrinks with every contribution.

Two people in the same club, in the same month, can therefore be in opposite situations. Which is why "I pay £200 a month" tells you nothing at all about where you actually stand.

Your position, month by month

Take a common shape: 12 members, £200 a month. The pot is £2,400, and let's say your turn falls in month 5.

Redo it in your head; the rule is one line: your position is what you've received minus what you've paid. Month 5: £2,400 received − £1,000 paid = £1,400 still owed. Month 8: £2,400 − £1,600 = £800. And at the end, £2,400 − £2,400 = zero. You've gained nothing and lost nothing — you've moved money through time, which was the entire point.

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So do I actually gain anything?

Not in money. Across a full cycle you get back exactly what you put in. A savings club is not an investment: it produces no return, and if your turn comes last you've tied up your money for nearly a year for nothing extra.

What it gives you sits elsewhere, and it's real: it enforces regularity — the pull of a group does what no app ever will — and it gives you access to a large sum at once, at a moment you wouldn't otherwise have had it, without borrowing and without paying anything extra. That's why millions of households have relied on it for generations.

But be clear with yourself, especially if you're weighing up joining one: the pot you receive is not a windfall, it's an advance. You will pay it back, to the last month of the cycle. A savings club is not a way to get money you don't have — it's a way to organise money you will have.

The real risk: the member who takes the pot and stops

This is the least-discussed part, and the only one that can actually cost you.

While nobody has received anything, a savings club risks very little. The imbalance appears after the first few rounds: someone who has already collected the pot and then stops contributing walks away with money that belongs to everyone else. And the people who absorb that loss are the ones who haven't had their turn yet — which is to say, precisely the people who have paid in everything and received nothing.

Three things reduce that risk, none of them technical: a group where everyone genuinely knows everyone (that is the security; there is no other), an order agreed and written down at the start rather than renegotiated as needs come up, and a sensible size — the longer the cycle, the more months there are in which a life can go sideways.

And the honest corollary: what you commit to a savings club is not money you can pull back on a whim. It's a commitment for the length of the cycle. Treat it that way in your budget — at the same rank as your rent, not as a nice-to-have.

What the research says

This has been studied seriously for a long time, and not as a curiosity. The reference paper in economics — Timothy Besley, Stephen Coate and Glenn Loury, in the American Economic Review of September 1993 — analyses these associations as a financial institution in their own right, observed worldwide². Their useful finding for you: the fixed-order and random forms, the most widespread ones, let each member reach a significant purchase sooner than saving alone would. That is exactly what you're using it for.

One nuance they raise, and it would be dishonest to leave out: there are also bidding savings clubs, where an earlier turn can be obtained by committing to pay more. There, a price does appear — implicit, but real². If your club works that way, you are not putting in quite the same as everyone else, and you should know it.

The World Bank, for its part, describes the mechanism in the same words your grandmother would: members' deposits are pooled, and the whole sum goes to a different member each round¹.

"Is it riba?" — where the opinions actually stand

It comes up in every circle. Our role here is to set out the opinions, not to settle them.

The position of the major fatwa bodies we consulted: it is not riba. The argument rests on the mechanism itself — everyone pays in the same amount, everyone takes out the same amount, nobody repays more than they took. Saudi Arabia's Council of Senior Scholars found in that direction by a majority of its members, at its 34th session held in Taif from 16 to 26 Safar 1410 AH (September 1989); the finding is published in the Council's own journal, without a decision number. Egypt's Dar al-Iftaa treats it as a benevolent loan: "the benefit in it accrues to no particular participant, but to the participants as a whole". Jordan's Iftaa Department goes the same way: members enter "by mutual support, solidarity and cooperation", not by a lending contract. The Qatar Awqaf fatwa centre concludes likewise. Shaykh Ibn Uthaymin summed the position up in a plain image: he lent a thousand and received a thousand³.

The minority position: it is. Minority does not mean marginal. Shaykh Salih al-Fawzan — a member of that same Council of Senior Scholars — sees "a loan that draws another": one lends only because a loan will come back. His position reaches us through a 2014 press report; the printed source could not be consulted. In Morocco, the jurist Mohamed Taouil judged the daret impermissible, on the ground of a loan conditioned upon a loan. The basis is a rule well known to jurists: every loan that brings the lender a benefit is riba. And the hinge of their objection is not the amount — that is equal on both sides — but the condition⁴.

A third position, and the one that bears directly on a reader of Maliki tradition: prohibition in principle, dispensation for need. Libya's Dar al-Iftaa — a country of Maliki tradition, as are Morocco and the wider Maghreb — ascribes prohibition to the Malikis, then grants a dispensation on grounds of need (its wording reaches us in substance, not verbatim). In other words, on that reading of the school: permission is not the starting point — it is a dispensation, lifting the hardship without cancelling the principle. And a dispensation granted for need is bounded by that need: for someone who has none, the principle still stands⁵.

In Morocco, no official body has ruled. We went through the fatwa corpus archived online by the Supreme Council of Ulema and the Ministry of Habous website: no institutional opinion addresses the daret as a savings mechanism. Beware a false positive: an official fatwa carrying the word "qurʿa" does exist — and since the daret is itself called "the qurʿa" in Morocco, the confusion is immediate. But it concerns allocating pilgrimage places when applicants exceed the quota, not rotating savings; its unanimity, in 2006, therefore says nothing about the daret. Among individual Moroccan voices the disagreement is real: Ahmed Raissouni judges it permitted, Rachid Benkiran, a preacher, goes the same way, while Mohamed Taouil judged the daret impermissible, seeing in it a loan conditioned upon a loan⁶. > See your savings club inside your plan, in 60 seconds — free, no card. See my plan →

How Namup handles it

In Namup, a savings club isn't one more expense. It's modelled for what it is: a 0% commitment, with its monthly contribution reserved among your commitments — at the same rank as your rent, inside the same single subtraction as everything else (income − commitments − saving = what's safe to spend).

And crucially, your real position shows up as it actually is at the moment you look: a receivable while you're still waiting for your turn, a shrinking commitment once you've collected the pot. That's what stops your net worth from lying to you — without it, you can believe yourself thousands poorer than you are, for months at a time.

What Namup does not do, and doesn't claim to: run the club itself. No member management, no reminders to the group, no money movement. Your money never passes through us. Namup models your club so your plan tells the truth; you and your group keep running it, the way it has always been run.

Three things that take a daret out of its simple form — and where Namup stands

Opinions exist on each of the three. Here, for what it is worth, is Namup's position — a product choice, not an answer to those opinions:

• fees that vary with how early your turn falls — paying more to go sooner buys a place in the order;
• a commission charged in exchange for guaranteeing a member's default — the Qatar Awqaf fatwa centre held in May 2025 that a guarantee is not an object of profit — it is that rule the case falls under (fatwa 512338)⁷;
• changing the order without everyone's consent.

And that does not settle the question. The minority's objection bears neither on fees nor on guarantees — it bears on the simple form itself, the one Namup records. No product setting answers it on your behalf.

Mechanically, and on a separate question, here is what Namup does: your daret is recorded as a 0% debt — the contribution becomes an obligation in your month, the pot an inflow, and the rate line reads 0%, reflecting your position month by month. That zero describes the amount, not the ruling. Namup keeps the record: it collects no money, guarantees nobody, and charges no fee.

The judgement is yours. What precedes is exactly what to bring to the person whose opinion you follow, and four points put the question completely: the amount is the same for everyone, the order is fixed at the outset, nobody takes a cut along the way — and each member pays in only on the understanding that a turn will come back to them. It is that last point, not the amount, that the minority position rests on.

Frequently asked questions

What is a ROSCA, exactly?

A group of people who know each other pay in the same amount at regular intervals, and the entire pot goes to a different member each round until everyone has had a turn. Depending on the community it's called a susu, a jam'iyya (a committee in Gulf English), a pardna, a tanda, a stokvel, a tontine, a chit fund or a daret — the same mechanism throughout. Over a full cycle, everyone pays in and receives the same amount.

Do you make money in a savings club?

No, and it's worth being blunt: over a full cycle you get back exactly what you paid in. It isn't an investment and it earns nothing. What it gives you is regularity — a commitment to a group holds better than a good intention — and access to a lump sum at once without borrowing.

Is it better to take an early turn or a late one?

It depends on what you need, not on what "pays" more: in a fixed-order club the amount is identical wherever you sit. An early turn gives you the money before you've fully paid it in — useful against a dated deadline. A late turn means you save first and collect after, which is safer but ties your money up for longer. That's the real trade-off, and it's yours to make.

Is a savings club savings or debt?

Both, one after the other — that's the whole point of this article. Before your turn it's committed savings: the group owes you what you've paid in. After your turn it's a 0% commitment you repay until the cycle ends. Which is why no single figure can describe your club, and why you have to look at your position in the month you're actually in.

What happens if someone stops paying?

That's the main risk, and it falls on the members who haven't had their turn yet: someone who stops after collecting the pot leaves with money belonging to everyone else. There's no formal guarantee — the only real protection is the quality of the group, an order fixed and written down from the start, and a cycle that doesn't drag on.

Can Namup run my savings club with my friends?

No. Namup models it inside your plan — the contribution among your commitments, your real position at any moment — but it doesn't manage members, send reminders, or handle payments, and your money never passes through it. The club keeps running between you, as always; we only make sure your budget tells the truth about what it represents.

In one sentence

A savings club neither makes you money nor loses you money: it moves money through time, and turns you from creditor into debtor halfway along. The day you can see which side you're on is the day you know where you stand.

1. Institutional definition: a rotating savings and credit association "typically operates by pooling members' weekly deposits and giving the entire sum to a different member each week" (World Bank / IFC, Global Findex note, 2017 data). The prevalence figures in that note cover sub-Saharan Africa. ↩
2. Timothy Besley, Stephen Coate and Glenn Loury, "The Economics of Rotating Savings and Credit Associations", American Economic Review 83(4), September 1993, pp. 792–810 — the reference paper, analysing "a type of financial institution which is observed worldwide" and citing tontines in Senegal and chit funds in India among others. They are the source for the distinction between fixed-order or random forms (the most prevalent) and bidding forms, where an earlier turn is obtained by pledging higher contributions. Reference. ↩

1. Council of Senior Scholars (Saudi Arabia), 34th session, Taif, 16–26 Safar 1410 AH (September 1989) — found by a majority, with no decision number published; text in Majallat al-buḥūth al-islāmiyya no. 27, pp. 349–350, reproduced here · Egypt's Dar al-Iftaa, fatwa 8397 (2 July 2024) · Jordan's Iftaa Department, fatwa 2663 (3 September 2012) · Qatar Awqaf fatwa centre, fatwa 1959 (27 Rajab 1420 AH / 5 November 1999) · Muhammad ibn Salih al-Uthaymin (Ibn Uthaymin), al-Liqāʾ al-shahrī no. 9 (paraphrase of the passage as transcribed). ↩
2. Salih al-Fawzan, as reported by the daily Al-Eqtisadiah, 11 June 2014 — his position is known through that press report; the printed source could not be consulted · Mohamed Taouil, as reported by Hespress, 12 January 2020. ↩
3. Libya's Dar al-Iftaa, fatwa 5429 (1445 AH / 2023-2024). Its acknowledgement of the Maliki position is reported in substance, not quoted verbatim. ↩
4. Verified absence: we went through the entire archived fatwa corpus of the Supreme Council of Ulema and the Ministry of Habous website, with no result bearing on the daret as a savings mechanism. The official fatwa on the draw concerns allocating pilgrimage places (3rd ordinary session, Rabīʿ I 1427 AH / April 2006, adopted unanimously). Individual Moroccan voices: Ahmed Raissouni · Rachid Benkiran. ↩
5. Qatar Awqaf fatwa centre, fatwa 512338, 9 Dhū al-Qiʿda 1446 AH / 6 May 2025 — a guarantee is not an object of profit. ↩