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Should You Co-Sign On Your Kid’s Credit Card?

Parents go through a lot of emotion and stresses during the freshman year of their child’s college career. It may even take a bigger toll on the parents than the student. Students have probably been waiting a long time to get out of the house and out from under the wings of their parents. Parents, on the other hand, still feel responsible for assisting the child during this period of transition and often find themselves still financing the child’s life.

Financial Support Options

So what happens when a student is out of the nest and needs financial support? Many parents object to a first time student working, until they become more acclimated with college life and academics. While a joint bank account and cash on hand is the avenue many people take, others rely on credit cards for backup. Parents can add their children as authorized users on their own account. Students can also apply for their own card. Nowadays, there are more and more options for college students looking for a credit card. There are all types of rewards programs and cash back bonus plans that are advantageous to a college student. Parents and students should look carefully at all of the advantages and disadvantages of each student credit card before opening just any account.

To Sign or Not to Sign

When applying for a credit card on their own, a student may not meet the criteria required to open an account without the help of a parent. Students who do not have a history of any kid of credit may need mom or dad to co-sign on the account, therefore making the parent just as responsible for payments. Parents need to consider what will be affected by this agreement as far as their own credit is concerned. It only takes one missed payment to screw up otherwise excellent credit for both parties. Co-signers have a responsibility to lay down the rules and teach their young adults about the consequences of credit and a lesson in budgeting is also recommended. Parents have an advantage now because the card can be monitored online at any time. In the past, a credit card statement came only once a month, often when it was too late to know there was a problem with misspending. Parents need to understand their credit is at risk and a clear explanation of that should be given to the student. Keep in mind, also, credit cards today do not always require a co-signer in order to open an account. Credit card companies have become more lenient in recent years and in a roundabout way, they assume many parents will take responsibility for a student’s debt, whether or not they are legally bound to do so.

If you have been considering co-signing a credit card account for your kids, make sure both you and your child understand the liabilities involved. As a co-signer, you are both responsible for the bills, the spending, and the lessons of financial responsibility.

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Guest post from Tisha Kulak, a writer for Creditorweb.com, where she writes about credit card offers, student credit cards and responsible credit card use.

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Comments (10)

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  1. Llama Money says:

    I’m of the school that a parent should never, ever co-sign for a child, even for something as ( seemingly ) small as a credit card. If the child doesn’t qualify based on the bank’s standards, then why should they qualify based on my standards? Am I more financially astute than the bank? I don’t think I am.

    Debit / Check cards work just fine for children / students. No reason to give them access to credit that they aren’t qualified for. If the bank says no, it’s for a reason.

  2. David says:

    I couldn’t agree more Llama Money!

  3. I don’t have a problem with co-signing for a credit card for a student, since it can help to build credit, however I would never do so as the FIRST lesson in personal finance. I expect to offer my kids “credit” as soon as they are old enough to understand it, so that when it comes to real credit they will already understand the advantages, disadvantages, and consequences.

  4. 1stopmom says:

    This is a subject that I have thought about and talked with my husband about at great length. I do not think it is a good idea to co sign anything for anyone. Not even my own children. I want them to understand the value of money and if I co sign for a credit card I do not see how that will teach them anything. Besides, I do not want them to make the same mistakes I did with credit cards. I do not want to encourage debt.

  5. This is a tough subject. I was an authorized user on my mom’s credit card account through some of high school and through college, and didn’t apply for my own credit card until the beginning of my senior year. I had never wanted or needed my own credit card until I learned through my boyfriend how important it was to build my own credit. So I got a student credit card through my bank and it was nice to be in charge of my own finances. If your child is new at college and doesn’t need a credit card, I wouldn’t co-sign on one. It’s the kid’s first time on their own, and they won’t have a parent there to tell them when not to make frivolous purchases. Especially if they haven’t had much credit education — this could lead to bad news, and with you stuck with most of the bills. I say wait until they’re a junior or senior, and let them apply for a student credit card in their own name. If they aren’t approved, then perhaps you can co-sign until they build enough credit. After a few years I would recommend them getting a card in their own name. So many college students are leaving with so much debt, why allow them to build up more, especially if they don’t need it? I agree it’s not a good idea for a first-year student to work, but after that, a part time job isn’t a bad idea.

  6. [...] Should You Co-Sign On Your Kid’s Credit Card? – Good article on the thoughts around co-signing for your children. I wouldn’t, but of course I don’t co-sign for anything. [...]

  7. [...] MyTwoDollars.com guest poster Tisha Kulak discusses the pros and cons of co-signing a credit application for your children (or anyone else for that matter). Most of the comments conclude that one should [...]

  8. [...] Our loved ones can be far from perfect. They could have made poor decisions that has negatively impacted their credit rating. As such, they are now coming to you, asking if you are willing to cosign for a credit card. This is a very hard place to be in. This card will help your family member with rebuilding their credit and getting their score up. The rub is that you are staking your credit score that they will treat their card right. You credit rating is rightly under your concern, especially if you ever want to apply for future credit, a loan, a car or house. How can you make this tough decision? [...]

  9. [...] is better than their credit, there is a good chance that someone is eventually going to ask you to co-sign on a credit card or loan for them. For some people, this will be a teenager seeking to get a first [...]

  10. [...] Should You Co-Sign On Your Kid’s Credit Card? Parents go through a lot of emotion and stresses during the freshman year of their child’s college career. It may even take a bigger toll on the parents than the student. Students have probably been waiting a long time to get out of the house and out from under the…… Online Stores [...]

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