Joint credit cards seem to be the perfect way for couples to manage their finances. This is simply a credit card account that the couple owns together. That means they get to use it and are equally responsible for paying it back – regardless of how much each of them contributed to the balance.
While it can be a great way to start combining the expenses and financial responsibilities, couples should be careful in using this joint account. If not, they might find themselves facing a lot of money problems that can put their marriage in danger.
An article explained that couples use a lot of strategies to manage their finances. Some prefer to maintain their income separate and will divide the bills payment responsibilities accordingly. There are those who will combine everything. Others will meet halfway – opening a joint account for the household and still maintaining a separate personal account.
As you can see, there are a couple of options for you and your partner to choose from. You need to find something that will work for your specific needs – something that will complement your personalities. And for you to be able to choose wisely, you need to know the options that you have – and one of them are joint credit cards.
Benefits of having a joint credit card
Having a joint account is understandable. But do you really need a joint credit card?
Some people have observed that couples who share their finances seem to be happier and feel more satisfied with how they are managing their relationship. Of course, there might be a lot of factors that you need to consider to make this assumption correct. And since we are not scholars, let us look at the obvious benefits of opening joint credit cards instead.
You get one bill
Since you both own the credit card, you will only receive one billing statement. This is just like the rest of your household bills (e.g. electric, rent, etc.) This makes it easier for you to manage your finances. When you have an easier time paying off your bills, there is a lower chance that you will miss a payment. Not only that, it is not that difficult to figure out where you are overspending – since you only have one billing to analyze.
You can give each other’s credit scores a boost
Between you and your spouse or partner, one should have a lower credit score. By joining your credit cards, you can actually influence the credit report of the other. Of course, you have to closely monitor the credit card and make sure it is being used and paid properly. The balance should be kept low and any purchase should be paid back in time. You need to set an example for each other when it comes to using credit cards wisely. Over time, the records of the joint credit card will reflect on both of your credit reports. If the other has a bad record, it should be able to help them raise their credit reputation.
You can help the other get a lower interest rate
This is actually in connection with the other benefit. If are pulling the credit score of the other, that would give the both of you a great credit reputation. In case your partner or spouse wants to apply for a loan that is under only their name, it will be easier. That is because they have a better credit report that is showing a high credit score. This will lead to more financial opportunities and a lower interest rate too. If you continue to manage your finances well, it will really give both of your credit reports a good standing.
Looking at these benefits, it will seem like getting joint credit cards is a really good idea. However, you still need to understand that having the credit card is not the primary reason why it can improve your financial situation. It is more of your joint effort to use the credit card in a smart way. It is also the way you pay off the balance that will eventually make the joint credit card an asset to your personal net worth.
Dangers of a joint credit card
It may be true that the benefits make joint credit cards attractive – but you might want to get to know the pitfalls first before you finalize your decision. Here are the common dangers that you might encounter when you have a joint card with your partner.
It puts you both responsible for the debt
Since both of your names are in the account, you need to know that the two of you will be responsible for paying the card back. In the event that one of you used the card too much and maxed it out, the two of you will be paying it off – together. The credit card company will not care who used the card. If you do not pay off the card, they will chase the two of you. The two of you will receive legal action. You will both be in danger of wage garnishment or the decline in your credit score. Both of your credit reports will bear the brunt of the mistake. There will be no distinction simply because it is a joint account.
It can be a trigger for fights
Both of you will get access to the billing statement. That means you will see how the other chooses to use the card. If one of you hid a purchase, this will reflect in the statement and can cause a fight. According to statistics, 3 out of 10 people in a relationship think that financial infidelity is worse than being unfaithful. That is how bad it can be if you mess up your finances because you were not honest with your partner or spouse. We all know that a lot of stress in a marriage is caused by money problems. Make sure that the joint credit card will not cause any of your to fight with each other.
It will be hard to manage the card after a breakup
This is a reality of life. No matter how much you love each other, there are issues that can lead you to break up. If you want to keep your finances from destroying your marriage, you need to ensure that it is managed wisely. Because if you end up separating, that card can be a problem. It is under both of your names and the creditor will come after the both of you if you fail to pay it back. You cannot really close that account unless it is paid off. And if the one responsible for the debt does not pay it off, both of your credit reports will be tainted because of it. Your best bet is for a balance transfer – but you need to agree as to who will pay it back.
As you can see, joint credit cards can be a good thing – but if it is not used wisely, it can be dangerous enough to destroy your relationship. You need to consider the situation as a couple. If one of you needs a credit report boost, then go ahead and help each other out. But if you know that it might lead to more problems in the future, then do not get one.