This post was originally published on Yahoo Money.
It’s an all too-familiar sight among some older millennials: A server places a group’s bill on the table and diners trip over each other to put the entire bill on their rewards credit card.
But the strategy often backfires, according to a new Bankrate survey, underscoring how lending money to family or friends in general - no matter how big or small the largesse - is often a bad, if common, idea.
Three in five Americans have helped out a friend or family member by lending cash. Of that, more than a third lost money and 1 in 5 said it damaged their relationship, the survey found. A third of those who lent a family or friend their credit card had something bad happen.
“It's another reason why we shouldn't mix, family, friends, and money,” Ted Rossman, industry analyst at Bankrate, told Yahoo Finance.
‘I’ll put it on my card’
Simply covering the tab after a night out with friends may not seem like a loan, but it can turn ugly and costly when your friends don’t pay you back. It’s also becoming a trend among older millennials — those between 30 and 38 — to pay the entire bill to earn extra credit card rewards.
More than a third of older millennials with rewards credit cards have tried to pay a group bill to get the rewards, whereas only 11% of older adults have done it, according to the survey of 2,500 U.S. adults.
Far outweighing the benefit of credit card rewards is the reality that many millennials are getting stiffed and ultimately paying more than their share.
Seven in 10 reported this happened at least once, and almost 1 in 4 said this occurred frequently, the survey found.
Gateway to debt
Credit card interest rates are at a 25-year high. So, the allure of credit card rewards like airline miles, cash back, or hotel points shouldn’t outweigh the additional interest you’ll face on your friends’ food or drinks if you can’t pay your credit card bill in full.
“The points might not be all they're cracked up to be,” Rossman said, noting that about about 6 in 10 cardholders already have debt.
“So, it's a double whammy if you’re carrying a balance, and somebody doesn't pay you back, because then you're paying probably 18% or so interest on top your friend’s portion,” he said.
When older millennials reflexively reach for the big bill, especially when there’s a reward payoff on the other side, Rossman pointed out that the intentions aren’t the purest.
“In a way, you’re trying to take advantage of your friends because you're trying to get the points on the back end,” he said. “You could actually view this as a little bit selfish and greedy.”
To avoid hard feelings, keep friendships strong and stay financially responsible, Rossman offered two pieces of advice on how best to split the bill.
First, pay your entire share and not just for your entree. Paying tax and tip isn’t optional and those should be split among the group, no doesn’t matter if you’re doing the invoicing or sending your portion to someone else.
Second, adjust your expectations. If you’re bent on collecting credit card points, go in thinking it might not work out and you’ll be subsidizing your friends, Rossman said.
“My advice generally comes down on the side of don't do it,” he said. “It's better to just request separate checks from the server.”
Read more in our Credit Cards section