Co-signing is a big decision

For the past several years, credit card companies have been targeting college students, signing up customers with a penchant for spending and poor understanding of credit.

The federal government eventually stepped in, passing the CARD Act, which restricts credit card companies’ ability to target young consumers. Now, buyers under 21 must demonstrate their ability to pay off their debt or get a co-signer for their credit card.

While this will ensure that students don’t end up with a bad credit history before they leave school, it could leave parents with an important decision: to co-sign or not to co-sign?

“Every parent has to do that gut check on whether their kid is responsible enough,” Bruce McClary of ClearPoint Credit Counseling Solutions in Seattle told the news source. “Or is he going to go crazy? Throw a keg party, hire a band and buy pizza for the whole dorm?”

For buyers with bad credit, it might not be a great decision to co-sign on a child’s credit card. It might be a smarter idea to get the student a prepaid or debit card so that they can’t accrue a large amount of debt.