This article is a guest post by Michael. Michael is a financial blogger who likes to share his tips for managing personal finances. He is also a content writer for creditcards.com.au.
So you’ve shared experiences, dinner and maybe even your apartment keys with the apple of your eye. Do you think it’s time to take it to the next level and share fiscal responsibility through a joint credit card account? Before you jump the gun, you need to see the pros and cons of such a major decision.
Benefits of having joint credit cardsBenefit #1: Easier to manage
It’s much more convenient to manage just one credit card than oversee multiple accounts, remember several due dates and make more than one payment. Having just one card is also lighter on the budget because you share the costs.
Benefit #2: Improves spending power
Applications for joint credit cards are usually given higher credit limits than individual ones. And since two people divide up the load of paying for the credit card, their card can handle more expensive items.
Benefit #3: Reward points add up more quickly
Since at least two people share in using the credit card, the reward points accumulate more quickly. This results in making better use of the card and its rewards.
Benefit #4: Helps the other get better credit
Having a joint credit card allows you to help the other user get better credit and even lower interest rates. In fact, being a joint user may be the only way for someone with bad credit to get a credit card. Of course, you can only enjoy this benefit if the card is actually used properly and paid on time.
Benefit #5: Can strengthen relationship
Teaming up for one credit card can encourage openness about finances and strengthen the relationship between the users. However, this would only work if both users have similar financial goals, careful spending behaviours and are devoted to each other.
Drawbacks of having joint credit cardsDrawback #1: Easier to max out
Since at least two people are sharing one card, it’s easier to max out, even if the account’s credit limit is higher, especially if at least one of the cardholders is a spendthrift. All it takes is to not know about the purchases the other recently made.
Drawback #2: Both users are legally liable
If either user of a joint credit card messes up, both are still legally liable for the debt—even the "innocent" one. It gets more interesting: Card companies can legally collect balances from either user even after divorce.
Drawback #3: Can cause arguments
You probably already know this one: credit cards, especially the joint ones, can cause arguments, particularly when the users have different behaviours towards spending.
Drawback #4: Both credit ratings are affected
If one user can help the other get better credit, it can work the other way as well. One slip up can hurt the credit ratings of both account owners. As a matter of fact, the user with good credit stands to lose more than the one with poor credit since the blunder probably can’t make bad credit any worse.
Drawback #5: Harder to manage in breakups/divorce
As mentioned earlier, both cardholders are liable for unpaid balances even when divorced. The problem here is that separations can make delinquent joint cards more difficult to manage. It may sound silly but during divorces, there are actually people who go on splurges to exact revenge on their exes.