Hitelkörs

Hitelkörs is a term originating from Hungarian, often translated as "credit circle" or "loan group." It refers to a type of informal savings and lending mechanism where a group of individuals, typically known to each other, pool their money together regularly. From this pooled fund, members take turns receiving a lump sum, which they can use for personal needs such as starting a small business, purchasing an asset, or covering unexpected expenses.

The core principle of a hitelkörs is mutual trust and solidarity. Members contribute a fixed amount on a predetermined schedule, such as weekly or monthly. The order in which members receive the lump sum is usually determined by lottery, agreement, or a rotating system. The member who receives the money is not obligated to pay interest to the group, but they are still responsible for continuing their contributions for the duration of the circle. Once all members have received their payout, the hitelkörs typically disbands.

These circles are prevalent in communities where access to formal banking services might be limited or for those who prefer a more community-oriented financial approach. They foster a sense of shared responsibility and can be an effective way to accumulate capital for individuals who may not have access to traditional loans. The success of a hitelkörs heavily relies on the commitment and integrity of its members.