What is fiado?

Fiado is a type of credit system commonly found in Latin America, especially in small towns and rural areas. It allows customers to purchase goods and services on credit, with payments usually being made weekly or monthly. In fiado, trust plays a significant role, as customers are not required to provide collateral or proof of their ability to repay the credit. Instead, the vendor relies on a personal relationship with the customer and their reputation in the community. Fiado is often used by individuals who have limited access to traditional banking services or who cannot afford to make upfront payments. While it can be beneficial for those who need it, it can also lead to debt and financial instability if not managed carefully.