[Disclosure: Cards from our partners are reviewed below.]
A joint credit card account is a type of credit account that, simply put, lets more than one person own and manage it. There’s no restriction on who can be an owner, so whether you’re friends, business associates, spouses or otherwise, anyone named on a joint credit card account has equal access to the funds and is equally responsible for its management. However, it’s important you do so wisely (more on that later).
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That can come in handy for married couples, particularly when it comes to the money they use to pay for joint expenses, such as a mortgage, utilities and so forth, but there are some things to consider before opening a joint account.
For example, to get the best interest rates, particularly on a joint credit card, both people are going to need good credit to get the best terms. There are some options, however, that will allow you to share finances without the need for both spouses being equally qualified. The first is making one of you an authorized user on the others’ credit card account.
Adding an Authorized User
Adding an authorized user is as simple as adding your spouse to your credit card accounts. You just call up the issuer, provide the name and other identifying information of who you want to add as an authorized user and a separate card will be mailed to them, assuming your issuer allows this. Your spouse can do the same thing for you.
That way each of you will have access to each other’s credit card accounts. This option may be a good fit for couples who are already in sync on most financial decisions, but might not be on equal footing when it comes to credit history and credit scores. That’s because the authorized user won’t be responsible for making payments and their credit scores won’t be considered. They will, however, reap the benefits of timely payment on these accounts because their credit scores will reflect the payment history if the issuer is reporting to the credit scoring agencies.
Keep in mind, though, that like a joint account, you’ll each need to be clear and upfront about your spending choices, because two people adding charges to a single credit card could really rack up a high balance.
For couples with opposite money personalities — like someone who spends freely versus someone who is averse to credit card debt — this option could lead to conflict as each spouse tries to convince the other to handle the credit card usage their way.
Keep in mind that the original card holder, not the authorized user, is the one who is ultimately responsible for paying any accumulated credit card debt and will see credit benefits if/when the account is paid on time. This same credit rating will be hit hard if there are negative activities associated with the card, like balances piling up or the account goes unpaid or becomes delinquent.
No matter how much an authorized user may contribute to the charges on a credit card, that person is not financially liable for the payment of the credit card account.
Keeping Separate Accounts
Some couples may prefer a “yours is yours and mine is mine” strategy when it comes to handling credit cards. Those individual credit card accounts worked just fine when you were both single, and they will work just fine now that you’ve tied the knot.
In this case, each spouse will handle the individual accounts as they see fit. That way, neither spouse will have to answer to the other about credit card spending choices. And each spouse will continue to maintain a solid payment history in their own name.
Each spouse is responsible for the payment of each individual credit card account. And the payment history and management of a credit card account is reflected in the credit history and credit scores of the individual account holder. As far as your credit file goes, you’re still swinging single. (Note: Even if you’re married, your credit profiles do not merge. Only if you are joint holders will someone else’s habits impact your credit.)
While a certain amount of credit separateness can be a good idea, having entirely separate funds can make handling joint household expenses a bit tricky. For example, which spouse should pay for the new living room set? And with what credit card? Should the other spouse help pay for it?
And what about the (typically) biggest joint purchase of all — buying a home? When you apply for a mortgage as a couple, a potential lender will look at both of your credit records, including the handling of individual credit card accounts.
So as happy as you and your honey may be not having joint accounts, it’s important to remember that each of your credit card choices will affect your joint financial options anytime you apply for a loan together. This is why it’s a good idea for each of you to focus on building strong credit health to make it easier for these large purchases or loans down the road.
Opting for a Joint Account or Two
If you both have good credit and you’re ready for some serious financial togetherness, you can consider opening a joint credit card account with your spouse. When you open a joint account, your credit reports and your spouse’s credit reports are pulled and reviewed. And you and your spouse are both liable for the payments on the account.
The account will show up on both your credit reports and it will be factored into each of your individual credit scores. Positive payment history and account management will boost both your credit scores, while a bad payment history on the account will hurt both your credit scores. With a joint credit card account, you and your spouse are linked together financially, for better or for worse, so it’s important you use the account wisely. To find out how to open a joint account, you’ll want to talk with your bank and/or credit card issuer.
You may decide to use a joint credit card account to pay for joint household expenses or for maintenance and repairs on a car that you both drive. Likewise, a joint checking or saving account can be established to pay for shared expenses, like a mortgage or auto loans. These bank accounts work in essentially the same way as a joint credit card: Both spouses are equally responsible for the account and have full access to the funds there, regardless of who deposited them.
Because the management of the joint credit card will affect both your credit ratings, it’s a good idea to come up with a clear payment strategy. Will you or your spouse make payments on the card each month? Or will you take turns paying on the account? You may decide to automate payments to a joint bank account. That way you’ll be sure to pay on time every single month.
These are all good options. The most important thing is to find a system that works for your relationship.
Find Out Where Your Credit Stands
You and your spouse can review your credit report summary for free on Credit.com. When you do, you’ll see your credit scores broken down into sections and graded. You’ll see, for example, how your payment history, debt and other factors affect your scores, and you’ll get recommendations for steps you may want to consider to address any problems or how to continue down a good path. (Note: Checking your own credit reports and scores does not affect your credit scores in any way.)
Constance Brinkley-Badgett contributed to this article.