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Lending credit card to family, friends is unwise, expert says

By Bill Gephardt | Posted - Jan. 10, 2014 at 10:10 a.m.


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SALT LAKE CITY — Have you ever loaned your credit card to a friend or relative, or perhaps bought something using someone else's card? There can be big consequences.

"I just gave it to my daughter," said Utahn Jan Harrison, "told her to run in and pick up some drill team shoes and bring it back out."

Troy Crocker has borrowed someone else's card. "They gave me their card and their PIN. I was kind of scared like, is a security guard going to come up to me?"

But Mike McGough won't lend his card.

"I can't imagine somebody loaning out their credit card. It just doesn't seem like it would make any sense to me to do that," he said.

A recent survey by Jumio Consumer Insights finds 29 percent of Americans have paid for something using the credit or debit card of a friend or relative.

Financial planner Shane Stewart used to loan out his credit card.

"Mostly to a child that was going to fill up at the gas station," he explained.

But not anymore. He said it's becoming increasingly more dangerous, in several ways.

First, you're violating your credit card agreement when you loan your card to your teen or friend. So, if someone defrauds them with your card, your card company will not back you up.

"You've broken the contract," he explained. "Even fraud that your friend or family member that you loaned your card to had nothing to do with, will not be rectified by the credit card company if they learn you weren't the one using the card."

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Then there's always the potential that the privilege of using your card gets stretched. Let's say you tell your teen to take your card and buy up to $200 worth of stuff for prom. Then you get a bill showing they racked up $700 in charges. You will get no sympathy from a store or your credit card company if you try to tell them you're not responsible for that extra $500.

"There's no recourse to get that money back. You simply have to pay it," Stewart said. "Then you're stuck getting that money out of a friend or family member, which may be even harder than getting it out of the vendor."

Stewart says better options include adding your family member to your account — with small limits — or get them a pre-loaded card.

The best option when loaning your card to a friend? Don't do it.

"Seeing through the eyes of a credit card company, they may be more inclined to let it slide if it were your child. But if it's the neighbor down the street, it would probably put up a lot of whistles and bells," Stewart said.

Set off too many whistles and bells, and the card company might terminate your account.

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Bill Gephardt

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