Should We Get a Joint Credit Card?

by | Jun 27, 2024 | Billsaver, Understanding Credit Cards

When you get married, most things become a “joint” effort. You likely live together, share possessions and may even raise children together. Many married couples also have a joint credit card account. However, before deciding whether or not you want to apply for a joint account, here are the pros and cons of sharing a credit card.

What is a Joint Credit Card?

A joint credit card, which is also called a shared credit card, is a line of credit you share with another person. It is similar to taking out a loan with another individual if one of you cannot get approved on your own. You do not actually have to be married to open a joint account with them. In fact, you do not need to have a relationship with the person at all. In practice, though, most joint cardholders are married.

If you share a joint account, you will each receive your own credit card to use, but both will be linked to the same line of credit. It works just like multiple phone lines on a cell phone account. Each person will have their own phone number, but data is shared by everyone. With a joint credit card account, when your spouse spends money on the account, it takes away from what you can spend. Both people on the account are also financially responsible for the debt.

The Pros of Joint Credit Cards

A joint credit card account can help one or both people build their credit. For example, if your wife has great credit, and you do not have any credit, you can use her positive history to improve your credit score and get a credit card. You will then both benefit from on-time payments.

Some credit card issuers will also offer a slightly lower interest rate on joint cards, especially if both parties have good credit. With these companies, you and your spouse may get a better APR if you share an account, but there is no guarantee.

The Cons of Joint Credit Cards

If you spouse has good credit and uses the card responsibly, having a joint account can help you build credit. Conversly, your spouse can damage your score if they use the credit card irresponsibly. For example, if your spouse acquires too much debt or makes late payments, you are equally responsible for these issues. Thus, your spouse’s action can hurt your credit score.

No one wants to think this could happen, but if you ever divorce or separate, financial problems can arise if you share a credit card account. If this does happen, you will want to close all joint accounts. If you keep these accounts open, you will be responsible for any charges made, no matter how the debt was distributed in the divorce. Also, if you leave the account open, your former spouse can increase the debt, make late payments or miss payments or default, and you will be held responsible. The credit card issuer will report the information to credit bureaus in both account holder names, which means the credit scores of both account holders will be affected. This can be costly for a number of reasons. Not only are you responsible for the fees and charges, a decrease in your credit score could increase the interest rate on your other accounts.

If you do need to close the account, write your credit card issuer a certified letter that informs them of the divorce. Request a current account statement and tell them you do not want to be held liable for charges made after the date of the letter. Ask the issuer to make the account inactive so new new charges can be made and ask that once the balance has been paid if full, the account should be closed. You will want to follow up with a phone call to confirm the request.

Is a Joint Credit Card Right for Us?

There are risks and benefits to sharing a credit card account, so ultimately, the decision is yours. If you do decide to create a joint credit card account, you may want to set certain parameters, so both cardholders understand how the account will work. Talk to your spouse about the pros and cons so you two can make an informed decision as a couple.