3 Advantages and Disadvantages of a Joint Credit Account

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Two years ago, my former roommate’s Valentine’s Day present from her boyfriend was their own apartment. Not your typical present, but what if you’re already at that stage in your relationship? Joint credit may be the next step on your mind, but before you make any final decisions, take a look at the pros and cons.

JointCreditCard.net explains that “having a shared credit card means that it is named under you and your spouse. Both of you can make charges to the card and both of you are liable to make payments. If you have [debts], the credit card issuer or bank can go after you or your spouse to collect. This is especially true if both of you agreed to become a co-signer.”

I read a lot of articles on this and there are three main benefits to joint credit:

1. Bill Management: Couples typically use a shared credit card account to pay for household bills or car repairs for a car they share. This makes things easier and more fair since it is being used for expenses they have as a couple.

2. Boost/Lower Credit Score: This will benefit or hurt the partners in question depending on their spending habits. Finance writer, Lucy Lazarony, points out that joint credit is best for couples who make similar financial decisions but “couples with opposite money personalities – say someone who spends freely versus someone who is averse to credit card debt — this option could lead to conflict as each spouse tries to convince the other to handle the credit cards in his/her own way.” She also stresses that each person needs to be honest about the way they spend.

3. Credit Qualifications: If one person has bad credit and the other good, a joint account can help boost the credit of both (again, depending on how that account is managed). Needless to say that once the credit score of the one partner improves, they can start opening new accounts with better interest and limits.

Now for the cons…As a majority of them stem from differing spending and management habits, be sure you really know and understand how each person plans to handle the account. Remember, joint accounts are best for those who make similar financial decisions! This will help minimize the cons.

1. Both of you are liable: This may seem redundant but it is a very important point. What if one of you has bad or impulsive spending habits? The other cardholder should not be responsible for irresponsible money management!

2. Can lead to difficulties in the relationship: Having different ways of spending and handling payments of the joint account can cause pretty heated arguments. Although no relationship should be founded in terms of money, it certainly has an impact on couples when they legally bind their credit and future together. There’s no denying that credit scores affect how we advance (or regress!) in the world.

3. Complicates Separation/Divorce: Both parties are still liable and responsible for this joint account, even after splitting. JointCreditCard.net lists a few solutions including paying off any debt asap, closing the account and applying separately (assuming one or neither can pay the debt), or simply removing one of the partner’s names from the account.