Q: My friend asks to borrow my credit card. But I have to wonder; should I be lending out my credit card to others?
A: Lending out your credit card is generally not recommended.
Here are six reasons to say no when a friend, partner or family member asks to use your credit card:
1. You’re making yourself vulnerable to fraud
By lending out your card, you are likely breaking the rules of your credit card contract and opening yourself up to unprotected fraud. Federal laws cap a card holders’ liability for fraudulent charges at $50. Many credit cards offer extra protection against fraud, too. However, these don’t apply if you’ve willingly lent out your card and fraud ensued. You’ll be completely responsible for all fraudulent charges.
2. It can hurt your credit score
Why risk hurting your score by allowing someone who has probably proven to be an irresponsible spender to use your card? If your friend uses your card and racks up charges that you can’t pay back, or exceeds your credit limit, this can affect your credit score in a very negative way.
3. You’ll enable bad habits
The borrower likely needs to use your card because of a buildup of irresponsible habits. You might think you’re being a good friend by helping them out in their time of need. But, in reality, you’re just enabling them to continue their path of self-destruction. You’ll truly be a good friend by showing tough love and saying no.
4. Payback time trouble
What happens when it’s time to pay that credit card bill and it’s a lot bigger than usual thanks to your friend’s spending spree? Your friend may refuse to pay you back, claiming the full bill isn’t due now and that you only need to pay the minimum payment. Of course, they’ll conveniently forget that this amount increases as interest gets added to the card’s balance.
This can go on for months-and it gets even stickier. Your friend may not understand that spending money on a credit card can mean paying back more than the cost of the purchase. Who’s responsible for paying the cumulative interest on your card, you or your friend? If your friend believes they’ve only borrowed the amount they used to make their purchases, you’ll be paying for the privilege of lending them money.
5. You’re putting your relationship in jeopardy
If you value your relationship with the person asking to use your credit card, you’ll turn down their request. Why take the risk of putting an unpaid loan between you and your friend?
6. You’re opening yourself up to repeat requests
Once you’ve started lending out your credit card, it’ll be harder to say no. The original borrower may make a habit out of asking you to lend out your card, and other friends or family members may ask you to grant them the same privilege.
When someone asks to borrow your credit card, just say no! Tell them about MCCU’s wide range of credit cards that they can apply for. We even offer a secured card if they are just starting out or don’t have a great credit score.
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