Pros and Cons of Joint Credit Card Accounts
According to a new survey, 33% of Americans would not have a joint credit card with a spouse or romantic partner. Another 46% of respondents said they would open an account, but they would wait until they were married.
Are there benefits to opening a joint credit account? If so, do they outweigh the disadvantages? Let’s weigh some of the pros and cons to determine the best choice for your family.
Advantages of Joint Credit Cards
The benefits of having a joint credit card include:
- Mutual credit score increases, assuming you make payments each month and keep the revolving balance below 30%. Learn more.
- More opportunities to earn rewards. A Wells Fargo study from earlier this year showed 45% of Millennial couples would have a partner as an authorized user to earn more credit card rewards.
- Potentially higher credit limits, since there are two contributing credit scores and incomes.
- Simplified finances. One transaction history, one monthly payment, one bill to worry about, etc.
Disadvantages of Joint Credit Cards
Despite the perks of having a joint credit card, there are some downfalls to keep in mind:
- Mutual credit damage if the account is not maintained properly.
- Shared liability for debt, even after separation.
- Difficulties obtaining individual credit accounts. This may occur after a bad payment history, or if the outstanding balance is too high.
Making the Right Choice as a Couple
Joint credit accounts can be great opportunities to improve your credit ratings and rewards balances. However, they can also be detrimental if the accounts are not maintained. Think about your needs as a couple, including your spending habits and existing debt. Avoid starting a joint account until you are in a heavily-committed relationship so you are not liable for someone else’s debt after separation. Consider your overall options, and then find the best fit for your lifestyle and goals.