Thinking about getting a joint credit card with a spouse, family member or friend? Make sure you know exactly what you're getting into.
With a joint credit card account, two people are equally responsible for the privileges and responsibilities that come with a credit card. That means that they can both make charges to the account, and they are both liable for the credit card balance. The details of the account appear on the credit reports for both owners. If the account becomes late or unpaid, the issuer can pursue both users for delinquency.
Because users on a joint account are equally responsible for the card and can both make changes on the account, you should consider all the advantages and disadvantages before applying for one together.
Pros of a Joint Account
A joint account can be useful for certain people who want to share the responsibilities of a card. A few of the advantages of a joint account include:
- Someone with lower credit scores can get access to more favorable terms. If one of the cardholders doesn't have as good credit as the other, they can take advantage of the joint account holder's higher credit scores to gain access to better interest rates and higher credit limits on a credit card.
- A joint account can help improve your credit. If the account is kept in good standing, after a period of time, a joint account can help lift the credit scores of a cardholder who needs more help in that department. It can be a useful way to build and establish credit for someone who needs it.
- The users cut down on the number of bills. A joint account means fewer bills to manage each month, which can help two people, like a married couple, simplify their finances. Both users can also share all the privileges of a card, like credit card reward points.
Cons of a Joint Account
Of course, there can be some major disadvantages to having a joint account as well. Be sure to take these into consideration:
- Both account holders' credit history is affected. If one credit card user racks up a lot of charges on the account or doesn't hold up their end of the payments, both of their credit scores will take a hit. And both joint account cardholders are equally responsible for paying off the card, regardless of who incurred the charges.
- Disputes over the card can cause issues in a relationship. A shared account is fertile ground for fights, especially if both users are not on the same page. If you don't agree about how much to spend or who should be making payments, this can lead to stress and discord in a relationship.
- Changes in the relationship can make things complicated. If you end up divorcing a spouse or go through some other kind of breakup, a joint account is one more thing you will need to close or figure out how to handle. What's more, one user can use the joint account to hurt the other user by spending and failing to pay bills on time or at all.
Should You Open a Joint Credit Card Account?
Each situation is unique, but you should know that a lot can go wrong with a joint account, so it's a decision you should weigh carefully. If you're considering a joint account, make sure you sit down and have a frank discussion with co-applicant about the responsibilities of the card, and about your spending habits and money philosophy in general.
It may make more sense to consider adding a spouse or family member as an authorized user if you're concerned about not having full control over an account. And if you do open a joint account together, it still may make sense for each person to have a separate credit card in just his or her own name, as well.
There are other ways you can share a credit card without having a joint account, like making someone an authorized user or a cosigner.
How Adding an Authorized User Is Different from Having a Joint Account
If you don't want to cede total control of your account to another person, you may consider making that person an authorized user. In this situation, the primary cardholder can add an authorized user to the account, who is allowed to make purchases on the card.
However, only the primary cardholder's credit history and credit scores are taken into account when the credit card issuer issues the card. Further, only the primary cardholder is legally responsible for making all the payments on the card, and if the account becomes delinquent, the primary cardholder is the person on the hook.
The authorized user typically can't make changes to the account—like requesting a credit increase—and the primary cardholder can remove the authorized user at any time. Being an authorized user can be a good way to establish or rebuild credit because in most cases, the account activity is reported on both the primary cardholder's credit reports and the authorized user's credit reports (though you should always ask the issuer to confirm).
If the account is in good standing, it can thus help an authorized user's credit history. Conversely, a delinquent account can hurt the authorized user's credit history. Primary cardholders should think carefully before adding a spouse or child as an authorized user because any negative behaviors on the authorized user's part will impact the primary cardholder's credit—and only the primary cardholder is responsible for paying the card.
Getting Credit with a Cosigner
While cosigners on loans are fairly typical, this is the least common option for sharing a credit card. If you have no or little credit history, you may try applying for a credit card with a cosigner who essentially vouches for you.
The cosigner's credit history and income are used to open the credit card, and both the cosigner and the other applicant are responsible for the credit card payments. Both of their credit scores and credit reports will be impacted by any positive or negative actions on the account.
If you're simply trying to build up your credit history and need a cosigner, applying for a secured card may be a better option.