More Things That Go Bump In The Night: A Look at the Credit Card Act of 2009’s Possible Impacts


In one of my previous posts I mentioned I had used my credit cards to buy a piece of property. It took my partner and I 33 days to sell that house and pocket a nice profit after paying off the cards. The rules are now changing for credit cards. You can still use them to withdraw cash but here is a twist you may not know about.

I call this kind of stuff things that go bump in the night. An overworked phrase perhaps but one that fits this particular scenario. Since most of us aren’t solo creatures we have families and families include children.

Children have a way of growing up and wanting the same things you and I have. And, as parents, we try to give it to them. Credit cards in this case.

New Ruling That Is A Zinger

I don’t intend on covering every credit card rule change. That would be a huge waste of time. I’ll only cover this one because its potential impact is huge.

It seems in certain situations your, let’s say, college bound child will only be able to get a credit card if you co-sign for him or her. What’s changed you may be asking. The Federal Reserve’s opinion on what credit card issuers want to do to you after you co-sign.

By the way, even if you aren’t required to co-sign, issuers will likely start appealing to parents to co-sign their children’s credit cards. If you are wondering why they would do that, you can thank the aforementioned Federal Reserve.

As it turns out, the wonderful organization known as the Federal Reserve (they control credit card issuers) has specified that issuers have the option of keeping the parent on the hook even after the young person turns 21. Think about that for a moment and extend your temporal horizon.

If your son or daughter keeps the credit card for 20 years, the co-signer – you – will be liable for the entire 20 years. I don’t know about you but I believe that piece of unpublished technicality will have a huge impact on a large number of folks.

So, in keeping with my philosophy of paying attention to other arenas that have the potential to impact my real estate investing, I put this news on the table for you to digest. Do with it what you will. Hopefully, you’ll never be placed in that predicament.

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  1. Hopefully people will do a search on the credit card revised rules and read it for themselves. There are other paragraphs with investment impact – and not the good kind of impact.

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