Pros and Cons of Joint Credit Cards
When two people have a joint credit card account, both people can make charges to the credit card and the card's history is included on both people's credit report. Both people are also liable for the credit card payments. When the payments become delinquent, the credit card issuer can go after either cardholder for payment.
If you're thinking about getting a joint credit card with a partner, spouse, or child, knowing the pros and cons will help you decide whether it's a good idea.
Advantages of Joint Credit Cards
There are some situations where having a joint credit card is beneficial for managing expenses.
You share a bill. When you and the other person, your spouse for example, have one rent, one electricity bill, one cell phone bill, it seems only natural to share a credit card bill. Having one less bill to pay can let you make the most of your income. Plus, when it's time to pay off your debt, you'll have an easier time deciding which card to pay back first.
Help one person get better credit. Adding a spouse or family member with bad credit to your credit card can help them get better credit. A spouse with bad credit may have trouble getting approved for a credit card on their own. Having a joint credit card will only work if the credit card is managed right - the bill is paid on time and the balance is kept low.
Help one person get a credit card/good interest rate where they otherwise wouldn't. Being added as a joint user might be the only way to get your spouse a credit card, or to get a low interest rate. This is especially true if one spouse has a bad credit score.
Disadvantages of Having a Joint Credit Card
There are also some reasons that you wouldn't want to have a joint credit card.
Both people are legally responsible for making the payments. That means the credit card issuer can take legal action against you for charges you might not have made to the credit card. You could even be sued and have your wages garnished if the credit card payment become delinquent.
Credit card disagreements could cause relationship problems. In a 2008 poll conducted for CreditCards.com, 19% of respondents who shared a credit card said they had arguements with the other person about the account. Seven percent said they'd cancelled a shared credit card because it caused relationship problems.
Breakups or divorce make it hard to manage the credit card. No matter what a divorce decree says, the credit card issuer holds you to the original credit card agreement. So if your ex-spouse isn't paying his or her share of the credit card bills, your credit can stil be affected. It's even harder to manage the credit card bill if you sever ties with someone you were dating or even a friend or family member.
One person could use the credit card to hurt the other. It sounds childish, but it happens, often after a breakup. One cardholder could go on a revenge spending splurge, leaving the other cardholder with the bill. If the revenge-seeker already has bad credit, she (or he) has nothing to lose from a maxed out credit card or a few more late payments.
Should You Share a Credit Card?
It's wiser to keep separate credit cards. Before you make the decision to get a joint credit card, evaluate your reasons for sharing a credit card. In the CreditCards.com survey, only 9% of respondents said they felt closer to the person after sharing a credit card. Similarly, 9% said they felt more in control of the relationship.
Discuss the pros and cons of having a joint credit card. Make sure both people understand the effect a breakup could have on your credit history.