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- A joint credit card can be a convenient way to share expenses with a spouse, domestic partner, or another member of your household.
- In most cases, one person takes primary responsibility for the card, no matter how the other person uses it.
- For that reason, only share a credit card with someone you know you can trust to use it responsibly.
Joint credit cards — meant for couples, family members, or business partners — offer a seamless way to share credit lines and merge financial responsibilities. This article delves into the myriad aspects of joint credit cards, helping you understand the advantages, potential pitfalls, and nuances of managing them effectively.
What is a joint credit card?
A joint credit card is a shared account that allows two people to access the same line of credit, make purchases, and share responsibility for payments.
With a joint credit card, both cardholders are equally liable for the balance, and the account activity affects each person's credit score.
While joint credit cards have some benefits, they aren't as common as authorized user credit cards.
How joint credit cards differ from authorized user cards
Joint cards and authorized user credit cards differ with regard to who's responsible for the account payments.
With a joint account, both cardholders are financially responsible. In comparison, only the primary account holder is responsible for making the payments on an account with an authorized user.
Adding a partner as an authorized user on an individual credit card might offer a middle ground, granting them access without the full weight of joint liability.
Joint account vs. individual credit accounts
Individual credit accounts are held by only one person, whereas joint accounts are credit accounts shared between two people. With an individual account, only one person is financially responsible, while both cardholders share the financial responsibility of the account with a joint account.
Benefits of a joint credit card
A joint credit card can offer various benefits, particularly for couples, close friends, or family members. It allows two individuals to manage expenses collectively. This can be a step towards shared financial goals, such as managing household expenses or funding a joint venture.
Easier to build credit together
A joint credit card can be a strategic tool for couples or partners looking to build or repair their credit scores. It can help one or both users build credit, as a positive payment history and low balances benefit both parties' credit scores.
Additionally, a joint credit card simplifies shared expense tracking, making budgeting easier.
Shared rewards and perks
With a joint credit card, both account holders earn rewards on all purchases made by either person. This can supercharge your credit card rewards earnings because points, cash back, and travel rewards can accumulate more quickly than on an individual card.
Another advantage is the easier unlocking of higher-tier credit card perks, such as bonus points or enhanced travel benefits. A joint account also simplifies earning rewards for shared goals, like vacations or significant purchases.
Risks of a joint credit card
Joint liability for debt
The flip side of shared responsibility is shared liability. Any misstep by one cardholder reflects on both account holders, potentially leading to financial strain or a damaged credit score.
Financial disagreements can strain the strongest of bonds; clear communication and agreed-upon spending limits are pivotal in avoiding conflicts.
Impact on credit scores for both parties
Just as good habits can uplift both parties' credit scores, irresponsible usage can drag them both down. It's crucial to understand the weight of joint decisions on financial reputations.
Establishing clear guidelines on usage, payment responsibilities, and spending limits is foundational to a harmonious joint card experience. Frequent check-ins and reviewing statements together can prevent misunderstandings and keep both parties on the same page financially.
How to apply for a joint credit card
Understanding eligibility criteria and the necessary documentation is the first step in your joint credit card journey. With myriad options available, it is crucial to select a card that aligns with your shared financial goals and spending habits.
Application process and requirements
Applying for a joint credit card is, for the most part, the same as applying for a credit card as an individual. The main difference is that both applicants' personal and financial information will be needed on the application.
You'll need to provide details such as both applicants' names, dates of birth, Social Security numbers, employment statuses, and incomes.
Note, however, that most banks do not offer joint credit cards. Authorized user accounts are more common.
Who should consider a joint credit card?
Anyone who shares financial responsibilities and wants a streamlined way to manage expenses can consider a joint credit card. By sharing a single credit card account, both users can access the same credit line, share the benefits and rewards, and are equally responsible for payments.
Couples and partners
Married couples or partners might find a joint credit card useful because it can make budgeting easier and create transparency in shared spending. If payments are managed responsibly, it can also positively affect your future financial standing by building your credit history.
Family members or business partners
If you manage joint expenses with family members (think parents or adult children) or business partners, you can also consider the benefits of having a joint credit card.
For example, business partners handling shared expenses can use a joint business credit card to keep costs organized. The same could be said for parents and adult children who share expenses like groceries.
Most importantly, each person must trust the other to make responsible spending decisions because both parties are equally liable for the account.
Examples of joint credit cards
Joint credit cards aren't common. However, if you decide sharing a credit account with someone else makes sense, there are a few joint credit card options to consider.
One of the most recognized cards that offers joint ownership is the Apple Card. This card allows you to add another co-owner to your account. Doing so requires a few clicks starting from your Apple Wallet app or the Wallet & Apple Pay section under your Apple device's settings.
The U.S. Bank Cash+® Visa Signature® card also allows cardholders to add a joint owner to their account. To do so, call the number on the back of your card and speak with a banker to initiate the request. You'll receive a form in the mail to fill out and sign. Then, have the prospective joint owner complete and sign their section and return the form for review.
Alternative options to joint credit cards
Outside of joint credit cards, there are alternative ways to share a credit line and manage financial responsibilities together.
Authorized user accounts
An authorized user account allows one person — the authorized user — to be added to another's credit card. The difference between a joint credit account and an authorized user is that the cardholders do not share equal financial responsibility. The primary cardholder is responsible for all payments, while the authorized user can make purchases on the account.
Authorized user accounts are a great option for parents who want to help their kids build credit, as long as the primary cardholder keeps the account in good standing.
Cosigned credit cards
With a cosigned credit card, the cosigner supports the primary cardholder in qualifying for the credit line by promising to cover payments if necessary. Both parties — the primary cardholder and the cosigner — are equally liable if payments are missed. Therefore, the account's activity affects both the primary user and co-signer's credit scores.
This can be a solid option when the primary applicant has a poor or limited credit history and won't qualify independently. However, cosigning on someone's account is a serious decision and should be weighed carefully. Additionally, not many credit issuers offer cosigned credit cards.
Best practices for resolving disputes over joint credit card expenses
Opening a joint credit card can lead to stressful — and expensive — disagreements if you and the co-cardholder aren't on the same page. The best practices for resolving disputes over joint credit card expenses include:
- Open communication: Regularly discuss and review credit card statements together to ensure transparency and address any concerns promptly.
- Clear agreements: Set clear guidelines and spending limits from the beginning to prevent misunderstandings.
- Documentation: Keep receipts and maintain records of expenses, especially for larger or more significant purchases.
- Mediation: If disagreements escalate, consider involving a neutral third party, like a financial advisor, to help mediate and resolve the dispute.
- Legal advice: In extreme cases, seeking legal counsel can provide guidance on rights and responsibilities, especially if the dispute affects personal finances or credit scores significantly.
Frequently asked questions about joint credit cards
Yes, joint credit cards can and will affect both account holders' credit scores. When you hold a joint account with someone else, both cardholders are responsible for the account.
If one person defaults on a joint credit card, both account holders are held responsible. If one cardholder decides not to pay, it's the other cardholder's responsibility to take care of the debt. Otherwise, both cardholders' credit scores will be negatively affected.
No, you can't remove someone from a joint credit card. The credit line was extended based on both cardholder's credit history, therefor the account must be closed if one cardholder wants to remove themself from the joint credit card.
Yes, there are some joint credit cards available today, but they are few and far between. Most major credit card issuers do not offer joint credit cards, though the Apple Card is a notable example. If you're looking for a joint credit card, it's better to look to smaller banking institutions such as your local credit union.
The main difference between joint credit cards and authorized user cards is that both cardholders are financially responsible for a joint account, while only the primary cardholder — not the authorized user — is financially responsible for a card with an authorized user attached.
If one party on a joint credit card passes away, the surviving cardholder typically continues to be responsible for the account. The account remains active, and the surviving cardholder must continue to make payments to keep the account in good standing. It's crucial to inform the credit card issuer about the death promptly to update the account status and prevent any future misunderstandings.
No, a joint credit card usually can't be converted into an individual account. Most credit card companies do not allow this directly. Instead, you can close the joint account and apply for a new individual account. It's important to consider the potential impact on credit scores and financial management before taking this step. Consult with the credit card issuer for specific policies and procedures.
Closing a joint credit card can affect your credit score in several ways. It may increase your overall credit utilization ratio if you have outstanding balances on other cards, as you lose the available credit limit on the closed account. Additionally, if the account has a long history, closing it may shorten your average credit history length. Both factors can potentially lower your credit scores. It's advisable to pay off any balances before closing the account to minimize the impact.
No, it is not possible to set individual spending limits on a joint credit card. However, some credit card issuers may allow account holders to set custom alerts or notifications for certain transaction amounts. It's a good practice to discuss and agree upon spending limits and habits with the co-cardholder to manage finances effectively and avoid potential conflicts.
