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Gone are the days when credit card companies could sign students up as soon as they stepped on campus. Under the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act, anyone under the age of 21 has to either have enough income to repay any debt they may accrue or have a co-signer.

However, before parents enter this type of financial arrangement, they need to think about what it means for their own credit.

"When you co-sign a card with your child, you're basically taking on equal responsibility. So any mistakes that child makes, you are also responsible for," says Stephanie Emma Pfeffer, a senior associate editor of Family Circle magazine.

So if a teenager cannot pay for a big-ticket item, the co-signing parent will have to pay for it, or pay in the long run with a marred credit history. Parents who do decide to start their children on the road to financial independence by co-signing need to make sure to be a backseat driver.

"You want to be having a dialogue with your kid," says Pfeffer. "If you see a really big purchase, say, 'Are you sure you can pay that off? We need to be responsible spenders.' You need to have a dialogue."

Pfeffer says one way for parents to stay on top of a child's spending is by making sure they have equal online access to the credit account. That way, the adults can track the spending and monitor the balance and payments. Also, she says rules need to be set.

"You also want to insist that they pay their balances off in full, and if for some reason they cannot and they need to carry over a balance to the next month, they need your permission to do that," she says. "And they need to have a payment plan set up so that they can meet their financial obligations."

If parents have concerns about co-signing a credit card, but want to make sure their children establish their own credit, experts say a secured credit card could be the solution. The card is linked to a savings account and limited to the amount of money set aside in that account. If the cardholder cannot make a payment, the money is taken directly from there.

Finally, should a teen get in over his or her head in debt, it is okay for parents to bail out the teen once, in order to protect their credit and future.

"You need to make sure that they have a payment plan set up where they pay you money every two weeks or every pay period to pay down the debt that they now owe you," says Pfeffer. "In the meantime, no credit."

This "get out of debt" card, however, should only be utilized once and it should not be free.