Paying down credit cards is a wiser choice than RRSP contributions: Personal finance expert
I get it. You want to help someone (most likely a family member); so when asked to hand over your credit card you might think: 'What can be the harm?'
The reality is there can be a lot of financial pain. Negative consequences include never getting repaid, intentional (or not) overspending, and lost or stolen cards. I have seen it all and it doesn't end well.
People will lend a credit card with the best of intentions and sometimes out of convenience to family members, colleagues, and friends.
I have to believe that was the thinking behind a grandmother who recently granted permission to her grandson to use her credit card for video games.
In an interview with Pat Foran on Toronto CTV News, Diana Liscoumb had this to say: "I don't know how anyone could rack up that much on a game. My grandson said it was for skins or credits.”
Liscoumb said her 13-year-old grandson asked if he could use her credit card to buy points for one of his video games. He ended up putting $1,400 in charges on the card.
While the tab ran up quickly, the activity wasn’t illegal and the charges were authorized. A refund isn't going to happen and this translates into a lesson learned the hard way.
Here is why I suggest you never lend your credit card to anyone. Ever.
- Charges can run up quickly and inadvertently. They still need to be paid.
- If you lend out your card and it is maxed out, it has to be paid back and this could impact your credit rating because it reduces your capacity level.
- You are 100 per cent responsible for what has been charged against your credit card if you share it.
If you still want to lend a card, you must be clear on the parameters; for emergency use only is a classic example. And be clear about that: use the card if the car breaks down or if emergency medical attention is required.
An emergency situation in my opinion isn't usage for video games, Amazon purchases or Uber deliveries.