The Good, Bad, and Ugly of Co-Signing Student Credit Cards
| April 19, 2010 |
When it comes to co-signing for any loan what is the first thing that comes to mind? As the answer will be different for everyone, since the implementation of the CARD Act millions of people have to rethink their position as a parent’s signatures is now one of few ways that those under 21 can get a credit card. Whereas some parents have been through co-signing before, now many have no other choice than to discuss this with their child. While stating the good, bad and the ugly may be a bit of an overstatement with co-signing your child’s student credit card, there are some pros and cons that exist and should be considered before putting your signature on that dotted line.
When looking at the pros and cons we look at an article entitled none other than, "Pros and Cons of Co-Signing Student Credit Cards". When it comes to the benefits and drawbacks we see that they include the following:
Pros:
- Comfort of knowing
- Building a strong credit history base
- Opportunity to help educate child
Cons:
- Liability for unpaid balances
- Potential negative reports on unpaid or late payments
- Difficulty of removing name from account
As we have moved away from the days where those under 21 could receive plastic without any knowledge of essentially how credit works, we have now found ourselves in a place where for the most part parents have a more active role in the decision process of getting a credit card. Because of this greater role many issuers have decided to target parents for marketing and demonstrating how getting their card would be more beneficial to both parents and students.
With the new law in place concerning your child and credit cards, have you decided to become a co-signer or have you and your child opted to go without a card at all?
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