Student credit cards and young credit

A credit card contract for parents, adult children


This downloadable contract between parents and their young adult children about credit card use can be a starting point for talk about co-signing for a credit card.

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Come February 2010, young adults may begin approaching their parents to co-sign for credit cards. A new federal credit card law will require people under 21 who want credit cards in their own names to get parents, guardians or other adults to co-sign the credit card application with them.

You can download the sample credit card contract, spelling out the responsibilities of parents and their adult children, in these three formats:

Source: Dr. John E. Whitcomb’s “Capitate Your Kids.” Used with permission.

Dr. John E. Whitcomb, a medical doctor and author of the book, “Capitate Your Kids,” recommends parents get kids to sign credit card contracts with their co-signers.

Unlike credit card contracts you might receive from a credit card company, this is a simple agreement spelling out the do’s and don’ts of how the card is used and what is expected of the young adult.

The credit card contract highlights:

  • The need to pay off the credit card bill every month.
  • Agreeing with parents what can and can’t be purchased with the credit card.
  • Establishing a maximum amount to spend each month without getting parental consent.
  • Setting up arrangements for young adults to repay parents (with interest) if the cardholder cannot pay off the entire balance each month.

Whitcomb says misuse of credit cards can lead a young adult to what he called “financial slavery.”

He advocates financial education about responsible credit card use. He adds: “Credit cards are the modern form of putting people into a long-term financial obligation and putting them in a terrible situation.”

See related:Credit card reform and you, Law may force parents, young adult children to talk about credit cards, Law alters cozy relationship between colleges, credit card issuers, A comprehensive guide to the Credit CARD Act of 2009

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