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With a joint credit card account, you can share ownership of a credit card with a spouse, close friend, or member of your family. YES. It’s a thing.
Adding someone as an authorized user to your credit card account is not the same as sharing a single account. Both cardholders are legally liable for the debt they acquire as joint account holders. Those who have been granted authorization to make purchases can use the card without incurring any debt. Only the account holder will be punished if the account is overdrawn or payments are missed.
This account type is becoming increasingly rare, with only a few large financial institutions still providing it, so plan ahead if you’re thinking about getting one. The use of authorized-user accounts is more widespread today than ever before.
Suggested Read: Can You Pay Rent With a Credit Card?
Pros of Having a Joint Credit Card
To share card ownership obligations, a joint account may be an excellent solution. A few of the advantages of having one include:
An account holder with a low or poor credit rating may be able to obtain better conditions. If one of the cardholders has a poorer credit history, they can use the higher credit scores of the joint account holder to get a better interest rate and a greater credit limit on a credit card.
A joint account can aid in the improvement of a person’s credit score. If the account is kept in good standing—that is, payments are made on time, every time—a joint account might help a cardholder who would benefit from a favourable credit history raise their credit ratings. It might be a good approach for someone in need to build and establish credit.
The shared account makes bill management simpler. Account-holders, such as a married couple, might benefit from this by streamlining their financial affairs. Both users can also share all the benefits of a card, such as travel rewards or cashback offered by a credit card company.
Cons of Having a Joint Credit Card
Before applying for co-ownership of a credit card, you might want to consider the cons too:
Both the account owners’ credit ratings will suffer if one cardholder runs up large charges on the account or if payments are missing. Regardless of who incurred the expenditures, both joint account cardholders are equally responsible for paying down the card’s balance.
Relationship problems might arise if there is a disagreement regarding the card. If both users disagree on how much to spend or who should make payments on a joint account, it might lead to arguments.
Things might become more complex if your relationship undergoes a change. If you’re divorcing your spouse or going through another type of separation, you’ll have to terminate the account or find another way to proceed with it. You might intentionally overspend or skip payments in order to harm another user’s credit.
Ways to Share a Credit Card
There are several ways two people can share a credit card account, which include:
As Authorized Users:
When someone is authorized to use another person’s credit card account without being held accountable for the charges, they are referred to as authorized users. Only authorized individuals have access to resources since they have cards with their names. Primary account holders will be impacted more because they are ultimately accountable for paying all charges, but authorized users will also see activity reflected on their credit records.
As Joint Account Holders:
Credit cards are less often associated with this word than bank accounts. Joint account holders, as the name indicates, are on an equal footing with one another when it comes to the account. Both of them are in charge of taking care of the financial obligations. Both parties’ credit records will be impacted by how the account is managed and whether or not payments are paid on time.
As Co-Signers:
A co-signer, as opposed to a principal borrower, assists another individual in obtaining credit. By signing the loan documents, co-signers agree to assume responsibility for the principal borrower’s debts if he or she defaults. Because both the borrower and the co-signer are equally responsible for repayment, this arrangement is similar to having a joint bank account in effect. Additionally, account activity appears on both parties’ credit records from the moment the account is established.
How to Choose the Best Joint Credit Card Out There
The ideal joint credit card for you and your co-applicant will be determined by what you both require. Having a good understanding of each other’s roles and responsibilities before you begin this process is critical. Here are some pointers to follow.
Have a Look at Your Credit Reports
You should check your credit reports first to discover what credit cards are accessible to you before starting the application process to determine whether you qualify. When it comes to shared credit card accounts, most people aim for decent to outstanding credit ratings (670-850). Prior to applying for a loan, you and your spouse should work on improving your credit ratings if necessary.
Find a Card that Fits Your Spending Needs
Consider how you and your partner will use your shared credit card and have a discussion about it. This will assist you in selecting a credit card that can accommodate both of your spending requirements. If both of you want a card that can be used to pay for petrol, a gas rewards card may be useful. If you want a gas card but your spouse wants a card with rotating rewards categories, you may be better off applying for a gas card with rotating rewards categories.
Make a Payment Plan Firstly
In order to choose a joint credit card, both of you will have to consider how monthly payments are handled. Make a strategy with your spouse for how you’ll handle making purchases with the card and paying them off. Will you divide the cost equally, or will you individually pay off your purchases? Is there a certain credit limit for each member, or may you buy whatever you want? Or will you simply make purchases for yourself and your family with the card? It’s critical to plan ahead of time for how you’ll use and repay your credit card expenditures.
Make a Reward Handling Strategy
Make sure you know how you plan to use your points before you apply for a rewards card. If you opt to pool your points on the card, you can use them toward activities or products you will do or use together. However, you have the option of allocating points depending on your individual earnings.
Prepare an Exit Plan
Joint accounts can be canceled for a variety of reasons. Before canceling a joint account, read the cancellation terms and conditions on your credit card carefully. Also, ask if one joint owner can keep an eye on the account. If this is the case, make sure you have a plan for how you’ll decide who keeps the account.
Putting it all in a Nutshell
Getting a shared credit card may sound like a smart idea, but these accounts are becoming less popular for a reason. Being able to earn your own rewards and signup bonuses on your spending means you won’t have to worry about other people’s purchases.
If you want to assist someone else in establishing credit or receive rewards on all of their transactions, adding an authorized user to your account may make sense. Another excellent reason to think about it is if you want your child or dependant to be able to use your credit limit in case of an emergency.
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What are your options for a co-signer credit card? According to the examples presented above, the answer is, yes, you can. Should you, on the other hand? Only you have the power to make the final decision.