Should We Get a Joint Credit Card?
When you are married, everything becomes a “joint” effort. You share a common living space, a number of possessions, and perhaps children. Many couples also have a joint credit card as well. Before you apply for a joint account, you need to weigh the pros and cons.
Should my spouse and I get a joint credit card?
What Is a Joint Credit Card?
A joint credit card, also known as a shared credit card, represents a line of credit that you share with someone else. This is similar to a loan you might take out with another person if you do not have the credit to get it on your own. You do not have to be married to the other person on the account or really have any affiliation whatsoever with the other person. However, in most cases, the joint cardholders are spouses.
With a joint account, each person will get his or her own credit card, but both cards will link to the same pool of money. Think about phone lines on a cell phone bill. You may have five people with five different numbers on the account, but the financial responsibility of the overall bill is shared by everyone. When your spouse spends money on a joint credit card account, it takes money away from what you can spend. All the debt acquired on a joint credit card account is completely mutual.
The Benefits of Joint Credit Cards
Joint credit cards have the potential to help one or both spouses build their credit scores. For instance, if your husband has great credit and you do not have credit, you could use his history to get the card. Then, you can both benefit from the payments you make on it.
Some credit card companies may offer slightly lower interest rates on joint credit cards, particularly if you and your spouse both have good credit. In this case, you might get a better APR with your spouse than you would on your own, but there are no guarantees of that.
The Downside to Joint Credit Cards
As we have discussed, your partner on a joint account can benefit your credit standing and help you receive a card. However, your spouse can also damage your score if he or she uses the card irresponsibly. If you are late on your payments or run up too much debt, you are equally responsible for those problems, even though it may have been your spouse’s fault. So a joint account can also hurt your credit score.
If you ever separate or divorce, some major financial problems can occur with a joint credit card. It is better to close all joint accounts. Since joint accounts are held by you and your spouse together, you are equally responsible for the debt, regardless of how the debt is distributed in the divorce. If an account is left open, your ex-spouse can add more debt, make a late payment, miss a payment or default, and you will also be held responsible. The creditor reports account activity to the credit bureau in both of your names. This affects the personal credit score for both individuals. It will not only be costly for you, but can trigger a rate increase for all of your other credit accounts.
When you close the account, notify the credit card company about the divorce with a certified letter. Ask them to provide a current account statement and tell them that you do not intend to be held liable for any debt accumulated after the date of the written letter. Request that they put the account on inactive status so no new additional charges may be added, and stipulate that once the balance is paid in full, the account is to be closed completely. Follow up with a phone call to your credit card issuer.
Should We Get a Joint Credit Card?
Getting a joint credit card is entirely your decision. There are both benefits and risks. It may be advisable to set up certain parameters so there is a clear understanding of how the joint account should work. Talk to your spouse about the pros and cons and come up with a decision that is better for you as a couple.