College Kids Buying Credit Card Cosignatures

Tell a college student they can’t do something and someone will figure out a way to monetize it. Thanks to the CARD Act, makers of fake ID’s on campuses may now have a new sideline business: selling real credit card cosigner signatures.

As of Feb 2010, kids under 21 can’t get a credit card without an adult cosignature. Rather than ask their parents, some college kids are simply paying other older students to sign for them, reports The Takeaway. A cottage industry has cropped up selling sigs for a fee.

The people selling their signatures are pretty stupid. If the buyer of the signature defaults on their credit card debt, the cosigner is just as financially responsible for paying off their debt. Is beer money really worth the risk of years of ruined credit reports and dodging debt collectors?

College students skirt rules to get credit cards [PRI via Lowcards.com]

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  1. Gulliver says:

    “As of Feb 2010, kids under 21 can’t get a credit card with an adult cosignature.”

    Do you mean with OUT an adult cosignature? If not the story makes no sense.

    • Darren W. says:

      I’d prefer it said “ADULTS under 21 can’t get a credit card without an adult cosignature”

      Really, if they can go to war, or be tried as an adult, they need to:

      a. Be responsible for their actions
      b. Be respected as adults who are responsible for their actions.

      I suppose that it’s too late to complain about this, even though this is the first I’ve heard of this specific regulation.

    • andyparkerson says:

    • andyparkerson says:

      The emphasis tag after “The Takeaway” isn’t closed properly, and it’s making the rest of the page italisized.

  2. mischlep says:

    “kids under 21 can’t get a credit card with an adult cosignature” should probably be “kids under 21 can’t get a credit card without an adult cosignature”

    #corrections

  3. aja175 says:

    wow. That’s gotta be the dumbest thing I’ve heard of college kids doing since… umm.. well… we won’t get into that thing I did in college, but suffice it to say it’s the dumbest thing I’ve heard of college kids doing since then.

  4. DanRydell says:

    In your effort to come up with a clever lead, you made the article confusing. I thought you meant people were forging signatures, but the article indicates otherwise.

  5. Loias supports harsher punishments against corporations says:

    You reap what you sow.

  6. qbubbles says:

    Time for a PSA. “The more you know!”

  7. zmnatz says:

    That’s one hell of a stupid law. Why the hell am I required to have a parent cosign my credit card if the bank will approve it without them. Why should I have rely on my parents or another adult for anything when I am of legal age (18).

    I’m 22 now but started using a credit card from my bank when I was 19. I’d never ask my parents to cosign for anything if possible. It’s my life not there’s. Stop mandating that kids rely on their parents and tell em to grow up government.

    • Loias supports harsher punishments against corporations says:

      This is because statistics show that young college kids are one of the most prone to credit card debt. It’s large two fold: they are still irresponsible with money, and they have no actual income.

      And to clarify, people under 21 can still sign up for a credit card by themselves AS LONG AS they can show the company they have income from a job to support the card.

      So really the law just prevents people under 21 from getting a card on their own when they have no income. What, mommie and daddie pay for everything? Good, then they can cosign on the card.

      • jessjj347 says:

        Here’s a thought: maybe college students are more prone to credit card dept because they have tuition to pay for?

        • Loias supports harsher punishments against corporations says:

          They aren’t paying those loans while in college. But they still have no income. No income + a credit card. I think the result is obvious and inevitable.

          College kids may be legal adults, but that does not mean they suddenly gain 100% independence. There is nothing wrong with getting help from your parents as you transition into a contributing member of society. It’s not a lightswitch to adulthood.

      • Nick says:

        +1

      • Rectilinear Propagation says:

        And to clarify, people under 21 can still sign up for a credit card by themselves AS LONG AS they can show the company they have income from a job to support the card.

        Which you’d think the CC companies would want to do anyway but apparently not.

        • themicah says:

          I suspect some banks were counting on the fact that a decent number of these kids would run up bills they couldn’t pay, and then turn to their parents to pay it off only AFTER the kids had rung up a bunch of interest and late fees (which are pure profit for the card issuer). I believe one family member of mine managed to turn something like $300 in charges into a $1,000 bill in just a few months while she was in college–and she eventually turned to her parents to help her resolve it. And I’ll bet there are a lot more cases like hers than there are cases where the bank actually ends up writing off the account.

          Requiring an adult cosignature means that the cosigner has a good motivation to tutor the young’n in the ways of credit responsibility.

        • JoJack82 says:

          The CC companies know that you are young, irresponsible and need money. They also know you will have a higher probability of being well educated and employed to be able to pay them back at some point. Plus if they get you while you are young they probably have a customer for life when you are out of school and gainfully employed.

          Also usually the limits are about 500 bucks on a College kids credit card so their risk is relatively low.

      • TasteyCat says:

        Having a cosigner doesn’t make kids responsible with money. Nor does not having a credit card at all.

  8. blinky says:

    [speechless]

    • zmnatz says:

      I’m just as speechless about the law as I am about the idiocy of these people in our “higher” education system.

  9. Michaela says:

    I haven’t met anyone on campus doing this, but it doesn’t surprise me that some people are this dumb.

  10. Dover says:

    Can’t individuals under 21 get a $500 limit even without income or a cosigner? Isn’t that enough for most college students?

    • Michaela says:

      Depends. If the card is used to buy text books or art supplies, a $500 limit is used up quickly. Heck, rent here is at least $400 a month at my school.

    • Hoot says:

      I started with a 500 dollar limit and it was totally enough. If you don’t have money to buy books or whatever you NEED, you should be working more, getting a bigger loan, or something else. Not shoving it all on a credit card for when you might win the lottery.

  11. Starrion says:

    Boggles

    Sell yourself as a co-signer to a poor risk college student.

    That should be on one of those Top Ten “Don’t do THIS!” lists

    • Sys Admn says:

      1) Steal room mate’s identity
      2) Use it to co-sign credit cards for a fee
      3) Profit!

      Roomie never even know his identity was stolen until/unless it hits the fan, or he/she checks his credit report. Odds are, that’s at least a year or two down the road.

  12. Guppy06 says:

    1.) Ask for a sum equal to the credit card’s limit as your payment.
    2.) Put that money into an interest-earning account while the foolish young adult uses the card
    3.) Keep an eye on the statements (say, online)
    4.) If your customer is more than 30 days late with a payment (but not 60), withdraw enough of the money to pay off the balance and close the account, pocketing the leftover difference/interest

    I’m basing this on two assumptions that I haven’t verified: that your own credit profile won’t start getting nuked until a payment is 60 days late, and that a cosigner can unilaterally close an account.

    • Loias supports harsher punishments against corporations says:

      Probably legal, but sure feels shady.

      • Guppy06 says:

        Then treat the payment as a deposit and return the difference after the account gets paid off and closed (but still keep the interest).

        If nothing else, it’s not near as shady as what the credit card companies will do to him on their own, and by stepping in to pay off and close an account before it becomes a real problem on anybody’s FICA score, you’re giving them “valuable life lessons” without letting them do any permanent damage to themselves (or you).

  13. Blueskylaw says:

    It would be one thing if you were just selling “access” to your good credit, but actually co-signing a credit card for a paltry sum? That’s the stupidest thing I heard since someone said you can do anything you want since it’s in the Bill of Rights.

  14. Loias supports harsher punishments against corporations says:

    I totally agree with the law, but sadly had it been passed before I finished college it might have been detrimental to me. I have a fantastic credit score and managed to get a home loan and car loan at 25 with the lowest interest rates available at the time. I attribute all of that partially to my credit card I signed up for when I first started college. Had I not had 4-6 years of good credit history via my credit card, I may not have been able to do such things.

    But I agree with the law – too many kids have no idea how to handle money yet. And the deck is stacked against them – they are for the first time entering the real world and are already knee deep in student loans and no income to speak of.

    • TheGreySpectre says:

      Yet if no one is teaching them they are likely to do the same things with the card when they get it at 21. As they no longer have parents around to teach them after age 18 (a generalization I know) and friends will be the same age, all this really seems to do to me is delay credit card debt, reduce the ability for responsible people to earn decent credit and open up the possibility for deals like this (which seem extremely dumb on the part of the co-signer)

      • Loias supports harsher punishments against corporations says:

        At least they’re more likely to have a job. I know it’s not ideal, but it’s better than nothing and despite our best intentions we can’t overpolice our population. Some of us are just going to have to learn the hard way.

  15. broncobiker says:

    Im 20 and I just got a new credit card a couple months ago. I have another though, was I grandfathered or something?

    • Rectilinear Propagation says:

      If the bill is getting paid for the existing card maybe they don’t have to make you do the income proof for every subsequent card.

      • broncobiker says:

        I havent done either. Actually most people laugh but I have three credit cards, good balances, great credit. It’s all in knowing how to use them :)

        Most people assume since I am 20 I don’t know how.

        • Eyeheartpie says:

          Same here. When I tell people that I’ve had a CC in my own name since I was 16, they always assume I racked up debt with it, when in fact I started with a 1500 dollar limit, and never carried a balance. Ever.

    • mbz32190 says:

      I’m 20 and despite the countless “approved!” apps. sent to me in junk mail, and me filling them out, they have all been denied. I guess I’ll have to wait until next year. I don’t see why so many are in a rush for a credit card though. My co-branded debit cards (from bank and Paypal) take care of anything I need, although building some credit would be nice.

  16. bethanyboo says:

    I got my first credit card at 18, built up fantastic credit, and bought a house at 22. If my mom had co-signed on my credit cards, they would have rejected me outright! However, the law states that you must have an income OR get a co-signer, which is perfectly reasonable and would allow responsible 18-20 year olds to build up credit without Mom and Dad.

  17. Bativac says:

    What a stupid law. Of course college kids are going to find a way around it. Now you’re going to have college freshman amassing credit card debt and the older college students who co-signed.

    Speaking as a former stupid college kid, sometimes you have to let people be victims of their own stupidity or they won’t learn anything.

    • Loias supports harsher punishments against corporations says:

      Agreed, but the law at least puts the fault on the student rather than the greediness of the system. The student decided to circumvent the spirit of the law, but at least the law exists.

  18. evnmorlo says:

    Might as well redefine “kid” as “anyone not in a mid-level government position or higher, or who doesn’t have 1 million dollars or more”.

  19. buzz86us says:

    wow that sucks I was added under my parents card since I was 16 and the credit card company decided I was ready for my own at 17 (credit card apps sent out in my name etc) since I paid it off in full every time. I have had that card ever since and I am 24 now well I guess for every irresponsible teen there is someone like me who will lose out because of them morons.

  20. Applekid ┬──┬ ノ( ゜-゜ノ) says:

    Ha ha, joke’s on them. My sold cosignature is fake. ;)

  21. AllanG54 says:

    Thirty years ago I used to work for Household Finance Corp. (HFC). Many of our borrowers needed co-signers. We used to privately call them, “A schmuck with a pen.” Because half of them didn’t understand what they were letting themselves in for. Oh well, live and learn.

  22. benh999 says:

    What if the fee is equal to the credit limit? Probably profitable and risk averse at that point.

  23. Mcshonky says:

    learn to write your signature with your other hand and when they come for you, say that isn’t my signature…… beer money and reasonable doubt. SUHHH WEET!!!!!!!

  24. sir_eccles says:

    At what point will banks work out Mickey Mouse has co-signed a lot of credit cards?

    (probably the same point they worked out Mickey Mouse was signing those foreclosures)

  25. sirwired says:

    The mind boggles. That has to be the stupidest thing I have ever heard of. I guess they are depending on the co-signer NOT reading the federally-mandated document all cosigners of debt must receive when agreeing to co-sign.

    Can I sign up for a couple dozen of these co-signers and legally steal every dime of it, free and clear?

  26. vitajex says:

    someone needs to close the italics!

  27. Murph1908 says:

    I tried

  28. Difdi says:

    Bonus points if someone sells their co-signature on a student loan. There’s a mistake that could follow you for the rest of your life!

  29. MyTQuinn says:

    This is a perfect example of why the law is good; despite their education, many college kids are stupid.- even the ones old enough to sign.

  30. zifnab0 says:

    Gotta love the unintended consequences of this law. It’s a stupid law that tries to force people to do something that they don’t want to do, of course kids are going to try to get around it!

    I hope everyone who advocates in favor of this law realizes that now, instead of having 1 college student with poor credit, you have 2 college students with poor credit.

    Yay government intervention!

  31. Mecharine says:

    Im sure some business students and/or dumbasses think this is a great proposition.