Co-signing a credit card makes you liable for every dollar someone else charges, with no say in how they spend. An authorized user owes nothing. If you want to help someone build credit, put them on your own card as an authorized user instead, where you can cut off their spending anytime.
The choice is often made for you. Most major card issuers no longer accept co-signers, and only a few banks and credit unions still do.
Where co-signing is allowed, you agree to repay the full balance if the cardholder doesn’t, interest and fees included. Their late payments can land on your credit report, and even when they pay on time, lenders can count the balance as your debt. Co-signers typically get no card, no statements, and no access to the account. Getting off the account usually means paying the balance to zero and closing the card.
With an authorized user, their charges land on your bill, but you control the account. You can remove them at any time by phone or online, and some issuers let you cap each user’s spending. The account’s history may also show up on their credit report.
Before co-signing anywhere, ask whether you could cover the full credit limit yourself if it came to that. If you couldn’t, don’t sign.
If you add an authorized user instead, pick a card you already pay in full each month, so their purchases don’t add interest. Where your issuer offers a spending cap, set it at an amount you could cover yourself, and check their charges on every statement.
When neither arrangement fits, they can build credit on their own. A secured card uses their cash deposit as the credit limit, and a credit-builder loan from a bank or credit union holds the borrowed money in savings until they’ve repaid it. Neither puts anyone else on the hook.
Offer the authorized-user spot first. You can take it back with one call. A co-signature usually stays until the card is paid off and closed.
Editorial & Advertiser Disclosure: The editorial content on this page is not provided, commissioned, reviewed, approved, or otherwise endorsed by any advertiser. Opinions expressed here are ours alone, not those of any advertiser. The offers that appear on this site are from companies that compensate us. That compensation may influence which products we cover and where and how they appear on a page – including the order in which they appear – but it does not influence our evaluations, ratings, or opinions. We do not include every company or offer available in the marketplace.
Related:
