Lending Money to Friends and Family Could Have Negative Consequences

Lending Money to Friends and Family Could Have Negative Consequences

November 15, 2019         Written By John H. Oldshue

There is an old saying that you shouldn’t lend money to your friends and relatives, and a new study seems to bear that out.

It is fairly common to borrow money from or lend money to your loved ones or friends. According to a new study from LendingTree, 51% of the respondents said they had lent to friends or family members during the last five years, and 44% said they had borrowed from their loved ones in that timeframe.

Featured Prepaid Card

Top Features:

No late fees or interest charges because this is not a credit card it is a prepaid card.

Despite the prevalence of these transactions, they do not always have positive outcomes. In fact, 24% of respondents said they regretted lending money to friends and family. More than one third of lenders have not been repaid in full, and 22% of borrowers said they have not repaid their loans.

Borrowers and lenders alike reported negative consequences from these loans, ranging from hurt feelings (14%) to decreased contact and resentment (10% each) to verbal altercations (8%); 4% of respondents said the loan caused irreparable damage to their relationship.

Nearly two thirds of borrowers said they felt guilty asking friends or family members for money. However, an equal number said they would not hesitate to ask for funds again in the future.

The most common reason for borrowing or lending money between loved ones was to cover rent or mortgage payments. Other reasons were automotive expensive, debt repayment, medical costs, and child-related expenses.

A good rule of thumb is to never lend out money you actually need to be repaid. This is when tensions flair, especially if the borrower is unable to repay the loan in full. As a borrower, consider alternative funding sources before potentially putting a strain on your relationship.

The information contained within this article was accurate as of November 15, 2019. For up-to-date information on any of the terms, cards or offers mentioned above, visit the issuer's website. Many of the offers on this article are from our affiliate partners, and LowCards.com may be compensated if you take action with any of our affiliate partners.

Review LowCards.com Editor’s Top Cards!

2020 Top Credit Cards by Category
Featured Prepaid Card
NetSpend® Visa® Prepaid Card
EDITOR RATING
Featured Prepaid Card
NetSpend® Visa® Prepaid Card

Applying for this card will securely direct you to the issuer's website.

Top Features: No late fees or interest charges because this is not a credit card it is a prepaid card. 

Featured Secured Card
Assent Platinum 0% Intro Rate Mastercard Secured Credit Card
EDITOR RATING
Featured Secured Card
Assent Platinum 0% Intro Rate Mastercard Secured Credit Card

Applying for this card will securely direct you to the issuer's website.

Top Features: Intro APR Offer on Purchases, No Annual Fee For First Year

Featured Fair Credit Card
Reflex Mastercard® Credit Card
EDITOR RATING
Featured Fair Credit Card
Reflex Mastercard® Credit Card

Applying for this card will securely direct you to the issuer's website.

Top Features: All credit types welcome to apply!

Featured Bad Credit Card
First Digital NextGen Mastercard® Credit Card
EDITOR RATING
Featured Bad Credit Card
First Digital NextGen Mastercard® Credit Card

Applying for this card will securely direct you to the issuer's website.

Top Features: Reports to all three credit bureaus, perfect credit not required for approval


john-oldshue

About John H. Oldshue

John Oldshue is the creator of LowCards.com. He worked for over 15 years in television and won an Emmy award for his reporting. He covers credit card rate issues for LowCards.com.