Do you trust loved ones to borrow your credit card? You will be surprised to learn that approximately half of all credit card holders permit their friends or family to use their credit card. Of all of those people that allow this generous act of trust, about a third, reported having an unpleasant experience. Over 2,000 people were polled, and six out of every ten people said they would allow an immediate family member to borrow their card and nine percent have said they allowed their friends to use their credit card. Some situations even allowed family or friends access as an authorized user on cards and accounts.
When it comes to credit cards, the true extent of one’s trust can be tested. According to a senior analyst at CreditCards.com Matt Schulz, there is about a one in three likelihood that you will get burned for your generosity. That same website approximated that 36 million individuals have had negative experiences when allowing others to borrow their card. These experiences range from overspending and not paying them back, or turning into a failure to return the card.
There is nothing wrong with wanting to help out those you trust, but at the same time, you may end up being better off denying their request for your own sake. In 2014, about 550,000 victims of fraud and identity theft reported that their information was compromised by someone they knew well. Your liability for authorized charges all depends on how swiftly you act. Liability for fraudulent charges can be limited to $50 if you are able to report any of these charges within two days, according to some federal laws.
However, you do not have the same safety net if you willingly gave your card to someone else and they misuse it themselves. In those cases, they are considered an authorized user, and no matter who purchased what, the original owner of the card is responsible for the full payment. Half of the individuals in that poll stated that they were actually comfortable with allowing a family member to charge over $100 on the card. Matt Schulz believes, “Ultimately, you’re better off just saying no.” He added that avoiding the financial mess could keep yourself from having any awkward conversations with your loved ones about it.
Allowing your spouse to use your credit card is one matter, but it is entirely different if you pass it down to your child. There are a series of suggestions offered by Javelin and Experian in order to better safeguard important information from others in your house. Suspicion can be a good thing when it comes to protecting valuables.
Lock Up Your Documents
Any credit card statements, tax returns, checkbooks and sensitive financial information should be locked away in a special drawer that only you can have access to.
Your Kids Don’t Need To Know Everything
Keeping your teenagers away from sensitive information, including your Social Security number and credit card numbers are highly important. Unfortunately, while it is admirable to trust your children, they may also be bound to potential mischief because they do not know any better. We love our kids, just try to bring them up slowly. Introduce them to financial responsibility a little at a time.
Be Wise Online
If you are not using your computer, turn it off. If you have sensitive information on a hard drive, remove it. If you have stored data on your devices, encrypt it.
Strengthen Credentials
Coming up with a unique, hard password along with two-step authentication can help you beef up security, making it harder for others to access information.
Account Alerts
Enable your accounts to have alerts, so you can be on the pounce at the slightest hint of suspicious activity not caused by you.
Put it in writing
If you are going to loan money to family or friends, draw up an agreement and put the entire transaction in writing. This way you can make copies and you each can have one. This keeps everything in the know and the other party has a hand written copy that they have signed to hold them accountable.
Having credit, bank accounts, lines of credit, finances in order, paying bills on time, keeping low balances are all part of responsible financial health. The problem is, when you allow someone to make use of your hard earned credit history and give them the free for all to charge an account or make use of money that your on the hook for, a lot of the time, the other party just does not have the same respect and hard line discipline to pay the money back on time. Make your decisions wisely. We have all helped someone in times of need. When you do, be prepared.
