Handing over your card to a friend or family member may seem like a nice gesture. You don’t have the cash to lend, but they can use your card. Banks don’t agree, though. Some prohibit it, while others allow it, but with conditions.
Here’s what you should consider.
Read the Bank Card’s Agreement
You signed an agreement when you got the bank card. Find it or get a copy online and read it. What does your bank say about shared cards? It will be one of the following:
- You can’t share your card. These banks prohibit sharing cards even with permission. Only you may use the card.
- You may share the card, but you bear the liability. You can’t call the bank and claim unauthorized use of the card, even if your friend or family member abused it.
If the bank allows sharing, find out what they require. Some allow verbal agreements for card sharing, while others require written permission. Even if the bank doesn’t require written permission, consider it.
What if the merchant won’t allow the use of the card if they realize you aren’t the cardholder? Unauthorized purchases put merchants at risk for chargebacks, aka lost money. Even worse, if the merchant thinks the person borrowing the card stole it, they may involve the police and confiscate the card.
Lending your Bank Card Despite the Rules
If you lend your bank card despite the bank’s rules, you put yourself in a difficult situation. If the bank finds out, they can enforce any of the following:
- Charge you fees
- Cancel your card
- Lower your limits
- Press charges (take legal action)
Liability Protection Won’t Exist
Most bank cards provide liability protection. If someone steals your card, you may not be responsible for the charges. You must report the theft within 2 days and you should only be liable for the first $50. But, if you lent your card to someone, that doesn’t apply.
For example, you lend your card to your best friend. She says she needs to buy a jacket for the cold weather. You gave her a limit of $100. When she returns the card, you find out she spent $300. You didn’t allow this, but you can’t tell the bank. They won’t protect you because you lent the card; it wasn’t stolen.
Don’t Use Someone Else’s Bank Card
Let’s switch roles. If you’re the borrower, your friend or family member has the same rules/liabilities. Use the rule – if you don’t have the money, don’t buy it. If you need the money, borrow cash, get a loan, or use your own credit card.
Using someone else’s bank card or lending your card is never a good idea. Each person is responsible for his or her own card and its charges. If you want to lend a friend money, take cash out of the bank. This avoids unnecessary issues with your bank, the merchant, and even the police.