Have you ever been asked to co-sign for a credit card? When receiving such a request, what was your response?

Many people, when asked to co-sign for a credit card for a family or friend, do it without thinking twice. That, in my opinion, is a very hasty thing to do, especially since it comes with huge financial responsibilities.

Being a co-signer to someone else's credit card means that if they fail to pay off their balance, then it will be your responsibility to make sure it gets paid off – in other words, you would have to pay it yourself if the cardholder you co-signed for hasn't got the money and fails to pay.

But, where can you draw the line? How can you know if it's a bad idea to co-sign or if it's ok to co-sign for someone else? The answer is simple – ask questions and weigh out the answers.

When being asked to co-sign for a credit card, be it for family or friends, you shouldn't take it as something emotional which would determine your friendship with that person, you should see it as business. No matter how close you are to the person who asks you to co-sign for his or her credit card, you should be aware of the risk you would run if he or she can't pay off the balance they accumulate once having the credit card.

If you are being asked to co-sign for a credit card, here are a few questions that you should ask both yourself and the person who's asking for you to co-sign:

1) Why does the person in question need a credit card?

To be approved for a student credit card, to improve their credit score, to pay bills or to have a different form of cash payment; those may be different answers you get, but in many of those cases, a prepaid credit card or a debit card would do just fine.

2) Why does he/she need you to co-sign? Why can't he/she get the card on his/her own?

If a person can't get a bank to issue a credit card for them without someone having to co-sign, then it's most likely that the person asking you to co-sign will not have the money to pay off the balance they will accumulate. If the person asking you to co-sign is under 21, they could get a credit card without you co-signing if they have proof of income.

3) Does the person who's asking you to co-sign have the money to pay?

Ask about the financial situation of the person asking you to co-sign and check if there is an option for him or her to get a debit card or a prepaid credit card if it doesn't seem like they would be able to pay off the card's credit limit.

4) Would you be able to pay off the balance in full plus any late penalties or other fees if the person asking you to co-sign can't pay?

Look at your own financial situation and check if you would have enough money to pay off the credit limit of the person asking you to co-sign. If you don't have enough money, your financial situation isn't looking good or if you only have enough for yourself and your retirement, then the answer should be no.

Are there other alternatives you can take instead of co-signing? Does the person have any other option?

You might be able to help the person asking you to co-sign to find a different option, like prepaid or secured credit cards or debit cards. If you are a parent, you might want to include your child as an authorized user on your credit card account and have the bank limit the amount your child can spend on the card, that way, you won't have a nasty surprise when the bill comes. Or if your child is going to college you can get them a student credit card to help them build credit while paying for day to day expenses.

Think Twice

Don't give a hasty answer. Keeping yourself out of debt is more important than co-signing just to please others. Don't be manipulated into making unwise financial decisions. Be polite and honest with the person. Sometimes you just have to say no.

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