When you and your significant other move in together or get married, you may reevaluate your finances. Should you combine finances or keep them separate? Should you share credit cards and bank accounts? As you talk through these issues and try to make the best decisions for your unique relationship, make sure you consider these 4 things to know before signing up for a joint credit card.
Do Credit Card Companies Offer Joint Credit Cards?
The first thing to know is that many credit card companies do not offer joint credit cards. There are only three banks in the United States that offer this option:
- Bank of America,
- US Bank, and
- PNC Bank
When Opening a Joint Credit Card Account Makes Sense
Having a joint credit card account makes sense if you each meet these criteria:
- You both have excellent credit,
- You both have solid employment and income,
- You can talk easily about money,
- You are both financially responsible
If you can’t say that you both meet all four of these criteria, you likely shouldn’t open a joint credit card account.
4 Things to Know Before Signing Up for a Joint Credit Card
Before you sign up for a joint credit card, know what the repercussions are.
You’ll Both Get a Hard Inquiry on Your Credit Report
Because you’re both applying, you’ll each get a hard inquiry marked on your credit reports. In the short run, this can temporarily lower your credit score. However, if you continue to use credit responsibly and don’t have any further hard inquiries on your credit report, your credit score should rebound quickly.
Both of Your Incomes and Credit Scores Will Be Considered
The credit card company will look at both parties’ incomes and credit scores when deciding if they want to approve your application. If your spouse has a strong credit score but you don’t or vice versa, the application may be denied. The same is true with your income.
Both of Your Credit Scores Will Be Affected
Since you each own the credit card, how you use it will affect both of your credit scores. If you use the joint credit card responsibly, but your spouse runs up a high balance, you’ll both be affected. You’ll each get a negative ding on your credit score. If the irresponsible behavior continues, both of your credit scores will fall even if you weren’t the one to spend too much.
You’ll Both Be Responsible for the Debt
This may be the most important point to consider. Since you both own the account, you’re both responsible for paying the debt. Even if you never use the card, if your partner charges $10,000, you’re both responsible for paying the debt. If she doesn’t pay, you will have to unless you want to ruin your credit score.
Even if you and your partner decide not to open a joint credit card account, you may still be responsible for your partner’s credit card debt if you live in a community property state. The nine community property states are
If you live in one of these states, you’re responsible for the debt your spouse accrues during the marriage even if it’s on his personal credit card. If your partner cannot pay his bills, the credit card companies can come after you to pay his debt. The same is true for your partner regarding your debt.
Opening a joint credit card with your spouse requires confidence in your partner’s financial habits and responsibility. Before you apply together, make sure you know the risks.