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What are the risks to lending money to family? Fights, damaged credit scores, and ruined relationships, survey says

Many people report not being paid back, but Millennials were the most likely age group to say that lending to a friend or relative ended badly.

DALLAS — As we gather for the holidays, hopefully those get-togethers don’t come with contentious and awkward conversations. 

We’re not worrying about divisive political conversations here. This is about money. Specifically, money that people may still owe to friends and family members from whom they have borrowed.

This isn’t the lecture we have all heard about how you have to be super careful about lending money to those close to you. Instead, let’s address the borrowers: If you ask for monetary help from someone you know or love, do everything you can to get their money back to them.

A Bankrate survey just found that 44% who lent to a friend or relative said it had a bad outcome. Respondents revealed that in most cases (38%), that just meant they lost money. But a significant percentage (23%) of people who financially helped someone they cared about said it ended up harming their relationship. Some (14%) said it damaged their credit score. And 7% of people surveyed said not being paid back after lending to someone they cared about culminated in a physical fight!

Of all the age groups, Millennials were (by far) the most likely to get financially burned after helping out a loved one. 62% of Millennials surveyed said it ended badly. So, again, beware mixing love and friendship and money.

How you can help friends or relatives who are older

Now, one thing you can do to help out a friend or relative who is older and in need is to make sure they are getting all the benefits they are entitled to. Some older Americans are missing out on the help that is available to them.

It is enough of an issue that the National Council on Aging has some new public service announcements reminding seniors that there are programs they are entitled to that can help pay for things like food, prescriptions, utilities, transportation and taxes. 

There is no guarantee that you'll rack up any kind of windfall from this, but it might be a good exercise just to check and make sure that you aren't missing out on any benefits. The organization has a Benefits CheckUp tool to help people make sure they are getting all the benefits they are due.

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