Thinking of lending money to loved ones? Think again

Lynne Adkins
October 14, 2019 - 4:30 am
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PHILADELPHIA (KYW Newsradio) — If you're thinking about lending cash to a friend or co-signing that college loan for your daughter, think again. Ted Rossman, an industry analyst with Bankrate.com, shared a new survey that showed nearly half the people who lend money get stiffed. He suggested finding another way to help.

"You can give advice, you can offer them connections, you can offer them support," he advised." "I generally think it's a bad idea to mix your family, your friends and your money, it just leads to awkward Thanksgivings and other events. You know most people don't have a warm and fuzzy relationship with their lenders."

Rossman also warned of risks in addition to damaging relationships.

"Basically about half the time when you lend money or lend your credit card or co-sign for somebody," he said, "it goes wrong and we're talking about losing money. We're talking about having your credit score damaged."

Rossman said if you feel you have no other choice then to hand over a check, think of it as a gift, money you can afford to lose and never see again. He also warns against using your credit card to pay for a group dinner at a restaurant expecting the others to pay you. Three quarters of us lose money on that deal.