Credit cards are everywhere, but they are not always easy to get. They do not always come with an affordable interest rate if you do receive approval for one. In some situations, joint credit cards can be helpful.
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As with any avenue of finance, make sure you know what you are getting into when you apply for a joint credit card. There are benefits as well as consequences associated with any type of credit.
What is a joint credit card?
A joint credit card is a single card that carries your name and the name of your partner. You each have a separate card with the same account number. Both of you can make charges to that card which will appear on one single monthly statement.
Some financial institutions and major department stores offer joint credit cards to their customers with a lower interest rate than a regular credit card. Major oil companies offer joint gas credit cards to their customers with lower interest rates to entice people to apply.
How will a joint credit card affect my credit score?
If one of you has a better credit score than the other, a joint credit card could help to raise the lower one. This is sometimes the only way to help your partner obtain a credit card with an interest rate that they would otherwise not be able to obtain.
Many parents often opt to share a joint credit card with their children who go off to college. They can track their spending and help their child to establish their own credit. But, again, be aware of the pitfalls of sharing your credit card with another person. Your good credit could help raise their credit score, but their mishandling of the card could hurt yours.
For college students, sometimes it is more beneficial for them to apply for their own credit card with a smaller credit line. Credit card requirements for students are usually not as stringent as they are for non-students.
According to the Fair Credit Reporting Act, all citizens of the United States have the right by law to request a free credit report from the three national credit-reporting companies that shows what their credit score is. You can check your credit score at AnnualCreditReport.com free once a year. By keeping track of your credit activity, you can report any discrepancies before they get out of hand.
What are the disadvantages?
With a regular credit card, one person makes the charges and that same person is responsible for the paying for those charges. However, with a joint credit card, both owners are responsible. If the payment is late, it affects both of you regardless of whose fault it was.
A joint credit card is issued to two people under a single account. This means that both parties are legally bound to repay the balance on that card. If the charges of the joint credit card are not paid, the issuing organization could take legal action against both parties, which could result both of you being sued. Even your wages could be garnished.
If one person has a difficult time responsibly managing their purchases, it can cause problems for the other cardholder.
By missing payments, not making payments on time, or going over your credit limit can affect both of your credit scores.
How do I apply for a joint credit card?
Applying for a joint credit card is similar to applying for a loan. The person with the better credit score applies for the credit card. Once they are approved and have received the credit card, they call the issuing organization and request that the second person be added to that account.
If you are only trying to help raise your partner’s credit score, you can add that person’s name to your credit card without ever letting that person actually use the card. This helps to minimize the risk of abusing the card and dragging you into debt with them.
On its website, the Federal Trade Commission highly recommends to avoid debt, all jointly held credit card accounts be closed as soon as you and your spouse have decided upon a divorce. The accounts can be reopened as individual accounts later. You can read further on this at.
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