Gephardt Busts Inflation: New data shows loaning money to a friend costs friendships
Oct 31, 2022, 10:15 PM | Updated: Nov 1, 2022, 11:19 am
SALT LAKE CITY — In a tough financial crunch, consumers might borrow money from their credit cards, bank, or retirement accounts to make ends meet. Others might turn to their friends. While it can feel good to be able to help a friend or relief to be able to get the help – tread lightly, warned Bankrate’s Ted Rossman.
“My advice is not to lend to family and friends,” he said.
That advice comes on the heels of some new research from Bankrate that Rossman shared with me.
The data shows that 42% of people have lost money after loaning it to a buddy and 26% have had their relationship harmed. Ten percent suffered damage to their credit score, while 9% got into a physical altercation over a loan to a friend. That’s right, nearly one in 10 that got into a fight!
“I think it just goes to show that these things do get really heated sometimes, unfortunately,” Rossman said.
The high price of gas, groceries and other needs has people racking up more debt. Rossman warned those lines of credit could eventually be tapped out. Turning to friends and family is sometimes a lender of last resort.
“People might be less likely to part with cash these days because inflation’s squeezing everybody,” he said. “But that’s also the reason people might be asking you for a loan.”
If you feel compelled to lend a friend money, remember that almost half of the people surveyed by Bankrate did not get paid back. So, don’t lend more than you can afford to lose.