If you use it wisely, a credit card gives you the opportunity to tap someone else's money while building your credit profile to get more credit in the future. It's also a tool that you can share with family members. While sharing your credit card might seem like a nice thing to do, it can also be a serious financial matter.
The responsibility for paying the credit card bill goes with the owner of the credit card, not with the person who uses it. If you let a family member use your credit card, you're responsible for their charges just like you would be for charges that you make yourself. When they use your card with your permission to buy what you ask them to, it might not do any harm. However, giving access to your credit card to anyone else puts you at risk that they will use it in a way that you don't permit.
Being a Lender
Letting family members use your credit card is like lending them money. However, in a way, it's worse, since instead of lending them your own money, you're lending them someone else's money that you'll have to pay interest on while they pay you back. Whether or not you choose to lend money to family members is a deeply personal decision, but as noted in USAA Magazine, it can lead to awkward situations if your family member can't pay you back.
Signatures and Permissions
Letting a family member use your credit card at a store could end up causing trouble. Store clerks are supposed to check to see if the signature on the back of the credit card matches the signature that gets signed at the cash register. If it doesn't, the store could choose to decline the charge or could even take the card if if feels that it's being used fraudulently.
Sharing Your Account
You can also share your account with your family member by giving them their own credit card. If you make them an authorized user, they will get their own card on your account. You'll get one bill and you will all share the same credit limit. However, you'll be responsible for how they use the card and they essentially won't be. Making them a co-signer on your account also makes them responsible for the account. If it gets used well, it could benefit their credit as well as yours, but if something goes wrong, they'll be on the hook with you.
- Consumer Action: Questions and Answers About Credit Card Fraud
- USAA Magazine: Should You Lend Money to Your Relatives? Two Money Minds Debate the Issue
- Indiana Department of Financial Institutions: Credit-Card Signature -- All the ID Needed
- CBS News: Credit Card for College -- Co-Sign or Authorized User?
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