If you are a credit cardholder, you might have come across instances when one of your friends or relatives asks you to make a purchase for them using your credit card. Several questions might come to your mind in such situations like is it right to make a purchase for someone else or not? Will it affect your credit score in any manner? The answer is Yes as well as No. It depends on various factors. If the person, for whom you are making a purchase using your credit card, is responsible enough to pay the amount back to you on time, you can do it for him/her. Similarly, your credit score might be or might not be affected depending on how much amount you are spending. So, you must keep a lot of things in mind before purchasing for someone else using your credit card. Read on to understand several advantages and disadvantages of the same:
Get Benefits of Spend Based Offers
Credit Card issuers keep launching various spend-based offers, under which you can earn thousands of reward points, accelerated cashback, gift vouchers, or other benefits by spending a minimum amount on your credit card. To get the benefits of such offers, you don’t need to overspend but you can make some purchases for your friends or relatives and ask your friend to pay for their purchase in the form of cash or bank transfer. In this way, you can achieve the minimum required to spend without actually spending that much amount and maximize your benefit during the offer.
Achieve Milestone Spend
If you are having a credit card, you might be aware of the milestone benefits offered with credit cards. Under this, you get additional benefits on spending a particular amount or more than that with your credit card. But, sometimes the minimum spend requirement is higher than your expenses. So, you can make some purchases for others and ask them to pay back to you later. In this way, you can even achieve the minimum spend required to get your annual fee waived off.
Let Your Friend Avail Maximum Discount Offers
Credit Cards offer exclusive discount offers during the sale several times a year. If one of your really good friends or relatives wants to make a big purchase during the sale, you can purchase it for them using your credit card as they will save even more if they buy it using credit cards rather than debit cards or cash. Moreover, you can also earn lots of reward points/cashback.
Negative Impact on Your Credit Score
If you make a big purchase for someone else using your credit card, you might be utilizing a lot of your credit limit. You might be aware of the fact that a high credit utilization ratio affects your credit score in a negative way. Utilizing more than 30% of your credit limit is not advisable if you want to want to maintain a good credit score. So, you should consider this factor before making a large purchase for someone else using your credit card.
Your Credit Card Might Get Blocked
If you keep making purchases for others using your credit card, or if you give it to others very often, your card issuer may block your credit card if they get to know about it. It is because the card is issued to you for your personal use and not for your friends or relatives. However, it is not illegal to hand over your credit card to someone else, but you should avoid doing so or do it at your own risk.
Getting Your Money Back Might Be Challenging
When you let your friends or relatives make some purchases on your credit card, you can not say when are going to get your money back from them as it might be a bit challenging to ask them for money on your own. Sometimes, they don’t even give it to you or they keep saying that they’ll give it to you later. So, you should make sure that you are using your credit card for someone whom you can trust.
Handing over your credit card to someone else is never a good idea, not even to your closest friend. Even if you are making a purchase for someone else, you should make sure that the card is being used in front of you or you can do it yourself. There are a lot of websites or apps that allow you to lend your credit card these days, But before using such sites, you must check for how authentic they are. Also, you should consider all the risks that are involved in doing so. Your credit card information should be kept very personal and you should beware of the fact that sharing your credit card number, CVV, OTP, etc, is not at all a good idea. You can make purchases for others using your credit card, but make sure that trust that person, or if you are lending your credit card on a website, do thorough research to check its authenticity. If you still have any doubts regarding the topic, you can ask us in the comment section below!