Co-signing can teach responsibility to avoid future debt problems
The Credit Card Accountability, Responsibility and Disclosure Act has prevented young adults under the age of 21 from applying for accounts without the means to repay the credit card debt, but issuers are still soliciting teens in hope of parents co-signing for cards. While keeping a child from owning a credit card can prevent debt, it can cause problems in the future.
Newsweek reports that young adults who are not exposed to credit typically have trouble later trying to apply for loans. Borrowers like to see that an applicant has a credit history and the means to repay debt. Parents who are considering co-signing for a child, but still have their doubts, should consider a few things before making the big leap.
Young adults should only look into cards with low interest and annual percentage rates. Inexperienced cardholders are more likely to fall into debt, which can snowball as a result of high rates. Newsweek advises parents to look specifically at companies with little or no maintenance fees as well.
Giving a young adult a credit card can not only help them build their credit scores, but teach them financial responsibility.