The Issues With Joint Debt (part 7)

Other types of joint debt situations

 You may not be married or even have a partner and still have joint debt. There are other ways in which people acquire loans and debt. Friends go into debt together when it comes to purchasing expensive items or equipment they both plan to use together. You may even have a friend or family member that co-signed a loan for you. Many times, parents go into debt with their children to help them out. There are several types of joint debt that is acquired by friends and family. In this section of our multi sectioned debt free article, we will be covering these instances in detail for you – take a look. But first here is something worth noting: Always remember that when you co-sign a loan for anyone, that commitment is reflected in your own personal credit standing. You may need to disclose it when applying fro loans for yourself. Most important – if the person who is listed on the loan first does not pay, you become responsible fro the debt and the monthly payments. If you do not take over the payments in a timely manner – your credit standing will suffer from it.

Loans with parents and children involved

Many times, parents will go into debt with their children for educational loans. Then, when the children are leaving college, parents may even help out with cars and co-sign loans in order to help their offspring establish credit in the real world. Many times, this is a legitimate way for young adults who are entering the world after schooling to get credit. On the other hand, this situation can lead to added stress on the parents if the child does not honor their commitment. Be certain that this is the right decision for all parties involved before going into joint debt in this manner.

Emergency credit cards or check cards for children

In this aspect of the article, we will use the term emergency lightly because in this day and age, many children have credit cards given to them by their parents for emergency reasons.

Credit card companies often issue second cards for authorized users such as children where the primary card holder is responsible for paying alone. As we have stated, many parents will provide their children with these types of credit cards for use in emergencies. As you may already be guessing – you will need to consider a few things before doing so.

The credit limit on the account as a whole will be available for all card holders. Some times, credit card companies will alert primary card holders when a certain amount has been charged or for large one time purchases even. This is not the case for all credit card companies, so know the details before you give the card to your child or children. If you do give your child a card for emergencies only, you need to be confident that they will abide by your rules. You don’t want to have to check the balance every stinking day do you? I cannot express the amount of times I have had friends who have given their children credit cards for emergencies and seen the card racked up with debt from shops in the mall. Any parent who can afford their child spending freely on their credit is certainly not reading this article either.

If you must designate a card for a child perhaps because they are going away to college and you want them to have emergency access to a credit card, be certain this is what the child uses the card for. Many parents will give their children a monthly allowance on the card, if so stick to it and be certain they abide by your agreement. If not, you will be responsible to pay the debt, not your college student. Also, make your child check to see if the card is physically where it belongs on a regular basis. Nothing is worse than a lost or stolen card. Many card companies insure you against identity theft these days. A great idea on your part would be to go with a creditor that provides this service when there are multiple card holders out there.

Now, many parents are providing their children with a monthly allowance on a checking account to also provides them a check card. While it may be easy for you to transfer funds into your child’s checking account each month while they may be at school and is interest free, you have to have a lot of faith that your child is not going to ruin your standing with the bank if they bounce the account into oblivion. There are many fees involved when this happens and you could be in a world of hurt if it happens. Yes, credit cards can sustain over limit fees, but at least the credit card will be denied when the limit is reached – checks can be written all day long. Check cards are a bit safer, but be certain this is what you want to do first. If I had to recommend one or the other – I would go with a credit card.

Continued...

(873)

Back to News Updates