How they describe themselves: TandemMoney, LLC was created in March 2010 and charged with minimizing consumers’ reliance on credit by building the next generation of small-dollar loan and savings products. TandemMoney reflects the innovators’ commitment to eliminating the financial barriers that reinforce credit dependency and inhibit savings accumulation.
According to the National Foundation of Credit Counseling, only 36 percent of Americans have the savings available to cover a $1000 financial emergency. TandemMoney mechanizes a financial shift for the consumer by initially using credit, a combination of credit and savings, and eventually savings entirely to cover unexpected financial emergencies.
How they describe their product/innovation: TandemMoney is both a consumer line of credit and a savings account that integrate to form a single, evolving source of “rainy day” liquidity. The product conditions borrowing upon the accumulation of savings as consumers must agree to have $20 automatically deposited into savings each month. Advances are made from accumulated savings, at no cost, with credit made available early on to cover any savings shortfalls. When advances are repaid, payments are made to the line of credit AND the savings account – as though the consumer was borrowing and repaying herself. As the savings balance grows with each $20 monthly deposit, the mix of funds available for financial emergencies steadily shifts more to savings until consumers ultimately reach the point of using (and replenishing) their own savings to meet their short-term cash needs.