How does a joint credit card account affect my credit?

There are many ways people share their financial lives, and it’s common to have a mortgage or car loan with a family member, partner, or spouse. You can also share a credit card account. While there’s no right or wrong answer to whether a joint credit card account is a good idea, there are pros and cons to consider.

What is the difference between a traditional and joint credit card account?

A joint credit card works like a traditional credit card, except the account is shared by two people instead of being held by one. Each account holder has a credit card, but the cards are linked to the same account.

The main difference with a joint credit card account is that the responsibilities and benefits are shared by both cardholders. Any card activity will affect both cardholders and you are responsible for paying the balance on the card even if you have not made any charges.

Advantages and disadvantages of a joint credit card account

If you’re considering opening a joint account, talk frankly with your co-applicant about the responsibilities that come with having a credit card in both of your names.

Advantages

  • An account holder with a lower credit score may have access to more favorable terms. If one of the cardholders has a patchy borrowing history or a lower credit rating, they can take advantage of the co-holder’s stronger credit history. Keep in mind, however, that lenders consider the financial profiles of both applicants when denying or approving a credit card application.
  • It can help account holders improve their credit. If you keep the account in good standing by making on-time monthly payments, a joint account can help improve the credit rating of a cardholder who could benefit from a positive credit history. It can also be a helpful way to establish credit for someone who needs it.
  • There are fewer bills to manage. A joint account can make it easier to manage bills each month because the account holders’ combined purchases appear on one statement. Plus, both cardholders can take advantage of features of a credit card, such as redeeming points for rewards, airline miles, or balance transfers.

The inconvenients

  • The credit history of both account holders is affected. If a cardholder goes on a spending spree or if payments are missed, the credit ratings of both account holders can potentially be affected. Joint Account cardholders are also responsible for paying the balance on the card, regardless of who incurred the charge.
  • Disputes over the card can lead to relationship issues. A shared account can lead to disagreements between cardholders over spending habits, debt repayment, and account management.
  • Relationship changes affect the account. If you divorced or experience some other type of separation, you will need to close the account, delete one of the parties, or otherwise figure out how to move forward with the account. It is also possible for one user to deliberately spend or skip payments to damage the other’s credit.

If you decide to get a joint credit card account, make sure you’re both on the same page about what it entails. It is important that you understand that you are both legally responsible for reimbursing any charges that one of you makes.

Speak openly and keep an eye on the account

When both parties are responsible for the money and have an open line of communication on financial matters, that’s a big plus. Agree to make payments on time, discuss major purchases ahead of time, and avoid going too close to your credit limit.

With credit cards, it is important to monitor card usage. If you share an account:

  • Regularly discuss household expenses and personal expenses with all cardholders.
  • Regularly check the status of an account by calling the credit card company or setting up access online.
  • Make sure the other account holder isn’t incurring excessive charges that you can’t reimburse.
  • Monitor your credit by checking your credit report to make sure your credit score is healthy. You can consult your credit report for free every 12 months on annualcreditreport.com.

As a security measure, some creditors will allow you to limit the fees of the person with whom you share an account.

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