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Should I lend my sister my credit card? Does she sign her own name on the bills?

By , CardRatings contributor
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Q: May I lend my reliable sister my credit card? Hers was terminated because someone else was putting charges on it. Does she sign her own name on the bills? Thanks!

A: Whoa! Despite all good intentions, you both could get into some sticky situations if you decide to go that route.

Here's a fact you probably won't know unless you work in the retail industry or you spend lots of time on a credit card bulletin board like CardRatings.com's:

Signatures don't matter.

More to the point, what you sign on a receipt only matters to the extent that it looks vaguely like the signature on the back of your credit card. Under merchant agreements with all four major payment platform providers, retailers can't ask for photo ID or challenge a customer about the name on the credit card they present for purchase. All they can do is verify that the signatures match.

I've seen otherwise well-balanced individuals work themselves up into a foaming-at-the-mouth frenzy when discussing this facet of credit card security. Store owners and many customers would love to see the banking industry support checking photo IDs against credit cards at time of purchase. While it's fair game to check identification for certain contractual transactions, most of the time, merchants can lose their charging privileges for this kind of activity.

If you think you're protecting yourself by writing the phrase "SEE ID" on your signature strip, think again. Retailers, under contract, still can't ask for your photo ID unless your signature strip is completely blank. In those cases, they're instructed to refuse the transaction at their discretion. Meanwhile, under today's credit card agreements, all you've done is make a signature that looks like the words "SEE ID."

Instead of letting your sister run around town with your card, which can get you both into trouble with your bank, just issue her a secondary credit card with authorized user privileges. You're not taking on any of her debt or negative credit, and you'll add some significant security features that you won't enjoy if she's just pretending to sign your name. That way, if "someone" starts running up the bill again, you'll both have the power to dispute those charges.

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