A joint credit card is when two people are equally responsible for that one credit card. In other words, both people can make charges to the account and will be responsible for the card balance. Is it a good idea to share a credit card? Keep in mind that your credit score can be affected by this. I’ll go over the advantages and disadvantages of owning a joint credit card below.
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Why is it Important?
When you find your way through the world of finances as a couple, it can be somewhat difficult. Everyone has a different source of income and spending habits. Maintaining a budget between two people can get complicated if you are not on the same page with one another. If the both of you work, it is possible that you share the same expenses.
Whether or not if you decide to split the bill or divide it based on income is up to you. However, it’s a different story when you put your finances altogether for mortgage payments, or utility bills. A credit card is on a different playing field than a debit card. Your debt on your credit card can get out of control so easily if you forget to pay a bill. If you are not careful, your interest or credit score can be effected.
Pros of a Joint Credit Card
It’s a tough decision to make to share a credit card with your partner. However, when you do open a joint card, it will come with several benefits for the both of you. One of the advantages of owning one is that it can help improve your credit score. Hypothetically, if your score is 600 and your partners is 800, you’ll get good terms for your card. Being on time to pay your bill and keeping your balance relatively low will also greatly help out.
If you forget to pay a bill, your partner might remember to pay it off, or at least remind you. Plus, owning a joint card will mean you get one less bill a month. Having a joint credit card means you and your partner must establish a plan on how to manage and pay for it together. There is an option to contribute money to one or two different accounts with several banks. However, there are still many variables that you must consider before opening a card together.
Cons of a Joint Credit Card
One of the biggest disadvantages of owning a joint card is the nonpayment. For example, if the other person makes a charge you cannot pay off, your credit score will be harmed. Both you and your partner are liable for your payment and if it is neglected, it will hurt you both. Normally, in a relationship non-payment or over spending is an honest mistake.
However, there are some cases where the partner can use the card as a weapon. Their goal can be to damage the shared credit without a care. This normally happens when someone tries to leave an abusive relationship with their partner. This tactic is used to make it more difficult for you to do anything with a bad credit score on your own. Fortunately, some state legislatures will make it easier for people to get charges from an abusive relationship removed from their credit report. Still it’s a big risk to know about.
Authorized Users
When you make someone an authorized user on your card is a step back from owning a shared card. The authorized user is able to spend but they will not have to pay for it. In other words, this is a popular option in families adding their kids as an authorized user. In most scenarios, the card will appear on the authorized users credit report even though they don’t pay the bill. This is a great way to help your kids or partner build up their credit score. See if your credit card company will report this to the credit bureaus for the authorized user.
However, if you’re an authorized user and a primary account holder, it will not be a good idea to have it added to your report. This will damage your credit score for a bill that you don’t pay for. Normally, this happens when someone falls behind on payments.
Conclusion
Overall, when you open a joint credit card, there are many factors to be aware of. Be cautious of who you open an account with and if it’s worth sharing the responsibility. There is so much that can go wrong with your credit card, and it takes a long time to rebuild credit. But, if you do decide to open one, it will come with great features. Plus, it isn’t a bad idea to still own your own credit card in your name only. This way, you’ll still build your credit with your own conditions and have something to fall back on if something happens.
