Poll shows lending money to friends, family is a bad idea
42% said they lost money through loans to friends or family members
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Nearly 60% of people who loaned money to loved ones indicated that extending the funds was not a good idea, according to a recent CreditCards.com poll.
The poll, released Monday, found that 59% of people who lent money to their family or friends expecting repayment reported doing so turned into a negative experience. Nearly a third of people surveyed reported loaning money by covering a group expense for friends or family to pay back later, according to the poll.
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The negative experiences ranged from losing money and taking a credit score hit to having relationships damaged and getting into fights, according to CreditCards.com.
About 42% reported losing money because the person they gave a loan failed to repay them, the poll found. Ten percent saw their credit scores take a hit due to loans to loved ones.
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"I’m not a big fan of lending money to family and friends because of the strong likelihood that something will go wrong," CreditCards.com senior industry analyst Ted Rossman said in a statement. "If you want to do this, don’t lend more than you can afford to lose."
CreditCards.com said 26% of lenders had their relationships with borrowers negatively impacted – and 9% reported physical altercations.
Roughly 39% of people said they would seek repayment from family or friends if $100 was not paid back to them, according to the poll. The same percentage indicated they would let it slide.
Younger adults were found to be more likely to try to get their money back, with more than half of Generation Z members saying they would and 43% of Millennials. Only 34% of Generation X and Baby Boomers indicated they would take steps to collect, according to the poll.
Additionally, the current state of the economy has made many respondents less inclined to extend loans to loved ones.
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About 40% said they are less likely to provide loans amid the "current economic conditions," with 26% indicating they are "much less likely" and 14% reporting "somewhat less likely," according to the poll.
Inflation has continued to hover near a 40-year-high, putting strain on the finances of many Americans, FOX Business previously reported.
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In September, the consumer price index rose 0.4% from August and 8.2% from the prior year. The costs of food, shelter, new vehicles, medical care, and electricity all increased month-over-month, according to the Labor Department.
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The Federal Reserve has been raising interest rates this year to bring down inflation, including three back-to-back 75-basis-point hikes.
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Meanwhile, 48% of people surveyed said the economy hasn’t impacted their inclination on whether to loan money to friends or family, according to CreditCards.com.
The poll was conducted Sept. 21-23 by YouGov among 2,304 adults.