Poll: Borrowing money was a bad idea for more than half of those who did

You may have heard the saying “neither borrower nor lender” from Shakespeare’s play Hamlet. Words of wisdom against the habit of becoming a personal banker for friends and family.

The results of a new survey by CreditCards.com show why this is wise advice. With the possibility of not getting a high payout, there are good reasons to hesitate before lending to someone who comes asking for a loan, or when lending funds while receiving a check for a group.

How lending money hurts the lender

The survey found that among those who borrowed money or paid group expenses in the hope of getting their money back, something bad happened to 59%. Forty-two percent of lenders did not receive a payment, so they lost money, and 26 percent experienced a damaged relationship with a borrower.

When you expand to the point where your own financial circumstances become more difficult to manage, you may not be able to pay your payments. Thus, 10 percent of respondents said that this had a negative impact on their credit rating. And, perhaps most disturbingly, 9 percent of those surveyed said they had a physical altercation with a borrower.

“I’m not a big fan of lending money to family and friends because of the high likelihood that things will go wrong,” says Ted Rossman, senior industry analyst at CreditCards.com. “If you want to do this, don’t borrow more than you can afford to lose.”

If you are a young person, you are even more likely to have a bad experience. The survey found that 68 percent of Gen Z lenders and 66 percent of their millennial counterparts were most likely to suffer negative consequences as a result of lending money or paying group expenses. However, the older generation is also at risk. Fifty-eight percent of Gen X lenders and 46 percent of boomers say they were burned in the deal.

What do people who lend money do when they don’t get their money back?

Creditors find themselves in a difficult position when close friends and relatives default on their obligations.

The poll showed that if people owed them $100 but didn’t pay it back as expected, 39 percent would try to get the money. However, another 39 percent say they will leave the debt unpaid. A similar 2021 survey by Bankrate also showed similar opposition between those who would try to return the money and those who would not.

There were several differences in collection between generations. 51 percent of Gen Zers are likely to take steps to get their money back, and 43 percent of millennials say they will. Gen Xers and Boomers scored 34 percent.

If you borrowed money from a woman, be more prepared for a collector’s call. According to the survey, 41 percent of women would try to demand money, as opposed to 37 percent of men.

Individual lenders refuse credit

And then there are regrets, with many survey respondents saying they wouldn’t have borrowed the money in the first place.

First, there’s the economy: 40 percent of all American adults say current economic conditions make it less likely they’ll lend money to a friend or family member. 26% are much less likely to provide a loan, and 14% – somewhat less often. Only 12 percent said they were more likely to enter into an agreement. The remaining 48% said they were “about the same” as likely to borrow money from an economic standpoint.

However, again, there is a difference between the sexes: 45 percent of women said they were less inclined to lend due to current economic conditions, compared to 35 percent of men.

Credit expectations vs. reality

The very definition of credit is that it is a temporary extension of funds. Consequently, 48 percent of American adults lent money to someone else in the hope of getting their money back.

However, not all loans require cash. Some involve paying for other people’s goods or services on the condition that they receive a full refund. Thirty percent of respondents covered the cost of group expenses, such as restaurant meals or event tickets, believing they would be refunded.

Interestingly, the younger you are, the more likely you are to become a lender by paying the full cost of group expenses or by lending money. Seventy-three percent of Gen Zers and 70 percent of millennials borrowed money this way. In contrast, 57 percent of Gen Xers and 54 percent of Boomers did.

The amount of money people earn is another factor that influences attitudes towards loans and group payments. The likelihood of borrowing money or paying group expenses in anticipation of reimbursement increases with an increase in annual household income:

  • 59 percent among those earning less than $50,000.
  • 62 percent among those earning between $50,000 and $79,999.
  • 69 percent among those earning between $80,000 and $99,999.
  • 70 percent of those earning $100,000 or more

bottom line

If you prefer not to become a lender, you have options. You can help the person who is applying for financial assistance in other ways, such as by reviewing their budget to determine additional funds. If you have any tasks or small jobs they can do for you, working for money might be a good alternative.

Or refer your friends and family to introductory credit cards at 0% APR. These products usually have a year or more without financial fees for purchases or balance transfers.

Finally, if you have spare money for a loved one in need, reconsider your role as a banker. “Consider treating money like a gift to limit the scope for resentment,” says Rossman.

Shakespeare would approve.


CreditCards.com commissioned YouGov Plc to conduct the survey. All figures, unless otherwise noted, are provided by YouGov Plc. The total sample size was 2304 adults. Field work was conducted September 21-23, 2022. The survey was conducted online and meets strict quality standards. It used non-probabilistic sampling using both quotas up front at the time of collection and then a final weighting design designed and tested to ensure nationally representative results.

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The editorial content on this page is based solely on the objective judgment of our contributors and is not based on advertising. It was not provided or ordered by credit card issuers. However, we may receive compensation when you click on links to our partners’ products.

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