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Too many folks have been burned after lending their credit card to someone else — 36 million people, by one recent calculation.
That’s the estimate CreditCards.com came up with after polling more than 2,200 adults in the U.S.
About half of respondents who have ever owned a credit card admitted to lending their card to someone else. Here’s to whom they’ve trusted their card:
- Spouses and partners: 30 percent
- Children: 21 percent
- Friends: 9 percent
- Co-workers: 4 percent
Among those folks who let others use their credit cards, 35 percent had a negative experience. To put that another way: If you lend your credit card to someone else, there’s a 1 in 3 chance you’ll suffer for it.
For the folks polled by CreditCards.com, the consequences included:
- Overspending by the other person: 19 percent
- Not getting repaid for the debt: 14 percent
- The card being lost, stolen or never returned: 10 percent
If you’re trying to decide whether to let someone else borrow your credit card, start by reading “The 3 Golden Rules of Lending Money to Friends and Family.”
If you decide to help someone out financially, consider not using your credit card to do so. Or at least understand that lending out a credit card is riskier than alternatives such as loaning cash. There’s more than money on the line.
If you loan someone $100 in cash, you basically cap your potential loss at $100. In other words, the worst thing that can happen is you never see that $100 again.
If you loan someone your credit card, you risk the monetary loss as well as interest charges and fees and — most concerning — damage to your credit.
Risking your credit
If the tab someone else rings up on your credit card is not paid in full, you’ll be charged interest until it has been paid off.
You may also hurt your credit utilization ratio, in turn hurting your credit score. We detail this in “Boost Your Credit Score Fast With These 7 Moves.”
If the credit card bill isn’t paid on time, you risk incurring other charges from the credit card company. You also further risk your credit score.
As we explain in “6 Simple Tips for Newbies to Establish Stellar Credit“:
“One late payment can send your credit score plummeting. … Making on-time payments is a significant part of your credit score.”
So, have you ever let someone use your credit card? Tell us about your experience by commenting below or over on our Facebook page.