More than half of Brits don't repay debts owed to their friends
The Bank of Mum and Dad could soon be a thing of the past as Brits are turning to their friends for financial handouts - borrowing £3.7 billion a year, according to research by TSB.
Almost a third (31%) of Brits have borrowed money from a friend in the last 12 months, making it the third largest 'lender' after parents (56%) and banks (42%).
While many Brits are only too willing to help a friend in need, it can come at a price as more than half of people have never been repaid, leaving them out of pocket by around £2 billion 1. In fact, a small minority (3%) choose to borrow from friends in the hope they will forget about the debt or write it off altogether, while 14% don't consider it real debt and the same proportion feel no pressure to pay up when it comes to returning money back to their pals.
Tempted by the ease and convenience of borrowing from buddies, many Brits risk becoming frivolous with their spending, with many admitting to using loaned money to pay for 'non essential' purchases such as holidays, the latest gadgets and leisure activities. In fact, more than one in 10 (11%) has taken money from a friend simply to avoid 'FOMO' (fear of missing out).
The popularity of 'Pal to Pal' lending means Brits are more likely to borrow from a friend than a partner, and more than half (54%) have IOUs from a network of at least two different friends, borrowing money on an average of four separate occasions.
What's more, men are more likely to borrow from friends out of convenience, while women are more likely to borrow from friends to conceal debt from their families.
However, this cavalier attitude to borrowing and lending money to friends leaves Brits at risk of not only losing money, but friends too. Almost one in 10 (8%) has had a disagreement with a friend about borrowed money and 7% of people are no longer on speaking terms with a former friend over an unpaid debt.
Yet, despite the rise of causal borrowing between friends, for some it's out of necessity rather than choice as one in five (20%) admits to borrowing money from a friend to foot the bill of day to day living costs.
Nick Smith, Head of Loans at TSB, commented: "As a nation, we seem to be very generous when it comes to helping a friend in need, but when it comes to money this can unfortunately break, rather than make, friendships. Borrowing money from friends can be convenient for a short term fix, but our research suggests people can become complacent about debts owed to friends and can take longer to repay them than they would a traditional lender such as a bank.
"Decisions about lending or borrowing money should not be taken lightly if people are to adopt better borrowing and healthier spending habits. Before making a decision, we urge people to consider all of the options available to them as well as speaking to their bank."
Online and Mobile Polling conducted by OnePoll on behalf of TSB, using a sample of 2,000 UK adults between 24 and 27 June 2016. 1 Calculation based on the average amount of money borrowed from a friend in the last 12 months = £73 x UK adult population of 51,339,161 = £3.7 billion. 54% have not been paid back - 54% of £3.7 billion = £2 billion.
TSB was built to bring more competition to British banking - to be a real challenger to the big banks and to deliver the kind of banking the people of Britain want. TSB only serves local customers and local businesses, to help fuel local economies, because communities thriving across Britain is a good thing for all of us.
We have a simple, straightforward and transparent banking model and make clear on our website how we operate and make money. We offer the products and services people tell us they want, with none of the funny stuff people normally associate with traditional banks.
Our 4.8 million customers, award winning mobile and digital banking, nationwide network of branches and 8,600 Partners mean we are big enough to make a difference, but small enough to be an agile challenger to the entire market.