Should You Co-Sign for a Credit Card?

Posted by admin under: Main Jan 08

It happens to most people at some point in their lives. A child, partner, or friend needs a credit card, but they can’t get one without a co-signer. So they come to you, desperate, and ask if you will co-sign. So, you think, “That’s pretty easy. All I have to do is sign my name and my (child, partner, or friend) can get the credit card they need.” Well, the truth is it’s not that simple. Here are some things you should think about before you co-sign for a credit card.

What you are agreeing to:

If the person you co-sign for can’t pay their debt, you are 100% responsible for outstanding balances, late fees, and other charges the credit card company decides to tack on. You should really think about the other person’s financial situation before agreeing to co-sign for a credit card. If it’s your child, will the credit card be for emergencies only, or will they decide to go on a shopping spree? If they do, will they have the means to pay the balance of the credit card? You know your child and what their sense of responsibility is. A lot of times, parents want their children to have a credit card for emergencies, or other issues that may arise. If this is the case, you should go over the limits for the credit card, and what it is to be used for.

Late Payments:

If the person you co-sign for is late on their credit card payments, you can receive a “late pay” notice on your credit report. Think about the other person’s history of paying on other bills. Are they usually late, or do they pay on time every month? Do they have another credit card? If so, is their payment history on that one the reason they need you to co-sign for this one? If they are habitually late on other payments, there is no reason to believe that this payment will be any different, and you may want to refuse to co-sign.

Think the situation over:

When you agree to co-sign for a credit card, it’s not just vouching for the individual. You are promising to pay the balance yourself if the other person can’t pay it. You should consider your own financial situation. If the individual is unable to pay the debt, would you be able to pay the balance on the card with your current financial situation? If you did, would the other person pay you back for the money you put out to pay the balance?

It’s important to think about these things before you agree to co-sign for a credit card. While the person you are considering co-signing for may have the best possible intentions, things can happen. Being fully prepared and understanding what you are getting into will help you decide whether to co-sign for the credit card or not.

Kerry Hedden is one of the owners of http://www.weoffercreditcards.com/ and believes that everyone should have a credit card and use them responsibly. That is why you will not only find the best credit card offers on our site but great articles and advice for using them wisely. We offer 100% original and free content articles that may be used and published*.