Even though consumer and student loan debts have each surpassed the trillion dollar mark, young Americans are still the most willing to help out friends and relatives in need, which could exacerbate their own debt as well.
(PRWEB) November 14, 2013
Ninety-two percent of young Americans, more than any other age group, would loan money to a family member in financial need, according to a recent online poll conducted by American Consumer Credit Counseling. The survey also found that 82 percent of respondents of all ages would lend money to a family member that has fallen on hard times and 66 percent are willing to give money to a needy friend.
Of the 234 consumers surveyed in the recent ACCC web poll at ConsumerCredit.com, 67 percent of respondents viewed an emergency such as a death in the family or a natural disaster as a justified cause for loaning money to a relative or friend. Similarly, 42 percent of those surveyed would help family or a friend pay their medical bills, whereas 41 percent would provide financial assistance to pay for regular bills such as rent, utilities or groceries.
“During these tough economic times, Americans are turning to friends and family for loans rather than the big banks to avoid spiraling into more debt and defaulting on regular payments,” said Steve Trumble, President and CEO of American Consumer Credit Counseling. “Even though consumer and student loan debts have each surpassed the trillion dollar mark, young Americans are still the most willing to help out friends and relatives in need, which could exacerbate their own debt as well.”
Every year, loan transactions between friends and relatives amount to $89 billion in the United States, according to the Federal Reserve Board Survey of Consumer Finances. When payback time comes, 15 percent of ACCC poll respondents stated that they would not require either a family or friend to pay them back. Additionally, 66 percent of consumers surveyed would require relatives and friends to repay the loan they had been given.
However, if the respondents knew they might not get repaid, 32 percent would still lend the money to a relative and 27 percent would still help out a friend in financial distress. According to a study about informal lending by psychologists George Lowenstein of Carnegie Mellon University and Linda Dezso of the University of Vienna, “borrowers were fairly confident they would eventually repay the loan, but lenders thought even one missed payment probably meant the loan would never be paid off.”
“By treating loans between family and friends as a business transaction, consumers can safeguard themselves from damaging an important relationship because of money,” added Trumble. “Although you might feel inclined to help out a loved one with finances, it’s important to openly communicate about repayment expectations so that no one is left in the dark or – worse in the red.”
The friends and family loan poll is the latest in a series of ACCC web surveys for 2013 that focus on a variety of financial education, budgeting, and planning topics. The online survey can be found at http://www.consumercredit.com/monthly-poll.aspx
American Consumer Credit Counseling’s certified and experienced counselors offer various financial education, counseling and debt management services to help consumers achieve long-term financial health and stability.
ACCC is a 501(c)3 organization, that provides free credit counseling, bankruptcy counseling, and housing counseling to consumers nationwide in need of financial literacy education and money management. For more information, contact ACCC:
- For credit counseling, call 800-769-3571
- For bankruptcy counseling. call 866-826-6924
- For housing counseling, call 866-826-7180
- Or visit us online at ConsumerCredit.com
About American Consumer Credit Counseling
American Consumer Credit Counseling (ACCC) is a non-profit 501(c)(3) organization dedicated to empowering consumers to achieve financial health through education, counseling, and debt management. ACCC provides individuals with practical solutions for solving financial problems and recognizes that consumers’ financial difficulties are often not the result of poor spending habits, but more frequently from extenuating circumstances beyond their control. As one of the nation’s leading providers of financial education and credit counseling services, ACCC works with consumers to help them with the best plan of action to reduce their debt and regain financial stability. ACCC is accredited by the Better Business Bureau and holds an A+ rating. It is also a member of the Association of Independent Consumer Credit Counseling Agencies. For more information or to access free financial education resources log on to ConsumerCredit.com or visit TalkingCentsBlog.com.