Lending a friend or family member your credit card is a really bad idea, according to a new national CreditCards.com study.
Of the 49% of credit card holders—past and present—35% of them said they’ve had negative experiences. The most common problem people run into when they allow others to use their credit card: overspending.
Last month, a Massachusetts Mutual Life Insurance Co. study revealed that an overwhelming majority (80%) of African Americans are more likely to financially help out a family member than 66% of whites. Could African Americans, in the name of helping out a family member, be putting themselves in financial jeopardy?
“You really are playing with fire when you let someone else use your credit card, so proceed with caution,” CreditCards.com Senior Industry Analyst Matt Schulz said. “Whether they spend more than you anticipated, don’t pay you back, or you never see the card again, ultimately, you are the one who is responsible.”
The study also found that younger people (ages 18–37) faced an unfavorable result compared to 31% of Gen X (ages 38–53) and 26% of Baby Boomers (ages 54–72). Others complained about not getting refunded. Ten percent even said their card was either never returned or lost.
The study concluded that most people who have owned a credit card would let immediate family members borrow it and half of them said they are comfortable with a family member spending at least $100. Thirty-nine percent say they would never lend their card to an immediate family member.
What the study found was that the less you make, the more likely you are to be burned. More than half (52%) of low-income earners who have lent their credit cards to someone have had negative experiences. The number drops down to a quarter for those making more than $30,000.