In many regards, co-signing a loan is a lot like actually being the main signer of that debt obligation. There are some subtle distinctions, but suffice it to say that deciding to be a co-signer is nothing to arrive at flippantly.
Co-signing a loan for a specific item such as a car or a house is actually in many ways safer for you as the co-signer than it would be for to you cosign for a credit card. Most times it’s a family member that is considering the role of co-applicant to a credit card, and usually not a whole lot of due diligence is spent making the decision. There are three main points that have to be understood before you even consider stepping up to the plate as a potential cosigner to a credit card for somebody else.
- The debt falls back on you if the other party cannot pay.
- In addition to the debt itself, you will also be responsible for any fees and collection costs, should the primary applicant fail to pay as agreed in the terms of the contract.
- You can be held accountable for debts that could potentially accumulate on the original debt should it go into collection and is not attended to in short time.
With just three common areas of concern on the table, for those considering being a co-signer for another person on a credit card, you can begin to quickly see just how risky a proposition it really can be to get financially entwined with somebody else in this type of way. Even if the person in question is a spouse, parent or child, the decision definitely warrants careful consideration and deliberation before becoming final. Once the ink dries on your signature, any financial implications that follow from that moment can’t be reversed. Think longer on this decision and you may potentially save yourself thousands or more in the long-run.