Joint credit cards are basically credit card accounts that are opened in the name of two people. Usually these people are a married couple or in some sort of relationship who are already sharing checking accounts and any other finances or a parent and his or her children. The two parties have an agreement to take full responsibility for the charges on the credit card regardless of who spends the money. As a couple it becomes much easier to manage bills and it also limits the number of accounts that you hold. Having a joint credit card is also a way of boosting your credit standing especially if the primary credit card holder has an outstanding credit score. In this kind of financial arrangement, you must be able to agree on how to spend the money. You should make decisions together especially if you want to make huge purchases.
Applying for credit cards jointly process
The first and important step is to decide on which one of you becomes the primary card holder. The person who has the strongest credit standing should be the primary holder. The name of the primary holder is what appears on the monthly bill. Then, apply for a joint credit card from any financial institution. Some of the institutions that give these credits cards include: credit unions, chain stores, banks or major oil companies for gas. Most of these credit programs also allow you to apply online. It is also possible to apply for these cards over the phone. If you decide to use the phone, ensure that you are with your co-signer as he or she will have to verify his personal information. Some of the information required includes your first and last name, date of birth, your social security number, your full home address, your job and your household income. It is very important for you to only get this type of a credit card with a person you know and trust. This is because if your co-signer misuses the card, you can be held responsible for the charges along with any penalties. If you and the co-owner of the credit card do not agree about spending habits or limits, it is not advisable to hold a credit card jointly. Read more here.
Benefits of joint credit cards
One of the major benefits of these cards is that both parties can share the bill. This makes it easier to manage card payments and to minimize balances. Also when the time comes to settle the debt, it will be much easier to decide on which balance to settle first. For some couples, this makes them feel closer to one another.Adding your significant other or family member with a poor credit rating to your card can help him or her to improve his or her credit standing. As a couple you can benefit in the long run by improving your credit scores which can help you to qualify for a mortgage with favorable terms.As a parent, holding a credit card jointly with your child can help in encouraging responsible use of credit while keeping a watchful eye. You can evaluate the charges that your child makes and if necessary discuss them with him or her. This teaches you child how to develop and maintain sound fiscal habits.These cards can also enable a person with a poor credit score to obtain lower interest rates and a higher credit limit that the person would not have got if he or she applied for an individual account.
Just like everything else holding a credit card jointly has its disadvantages. Some of those disadvantages include:
Misuse of the card by one party adversely affects the credit of both parties. This can have lasting financial consequences. It may also cause unwanted strain in your relationship.Differences in spending habits are amplified. You and your co-signer may not agree on how much should be spent and for what. Sharing the credit card can aggravate the complications that arise from that. It can be a very good thing if the two of you can sort out those issues together but it can also be very hard.If in case you are unable to work out your differences and you break up or separate, the debt still remains even after the relationship is gone. The outstanding debt becomes an item in the list of things to be settled during divorce if it comes to that. The only way to get out of the debt is to clear all the outstanding debt as soon as possible and remove your name from the account.
Does a joint credit card negatively affect a credit score?
The answer is yes. If you can not agree on the spending limit and pay back the outstanding debt your credit score can be ruined. If you have a strong credit standing but the other person misused the credit card, you might end up with bad credit. To protect your credit score, you should make regular payments so that neither of your credit standing suffers. If you end up divorcing, it is advisable to close all the joint accounts as soon as the relationship ends. This is because the other party could keep charging if you do not close the account which could end up ruining your credit score. To avert such eventualities, write to your creditor and officially notify them of the situation. In your letter, clarify that as soon as the balance is fully settled the account must be closed. Request the credit company for a current statement of the account. Make it clear to your creditor that you have no intentions whatsoever to be held liable for charges made after the date of the official letter. To ensure that the mail reaches safely and on time to the creditors, use certified mail.
All in all holding a joint account is a big step and thus it should not be taken lightly. It is not a requirement for every married couple to have joint credit cards. Equally, not every child is ready to have a shared account with his parents or guardians. If you are intending to sign up for a joint credit card account, it is advisable to thoroughly discuss with the other person involved. Otherwise you and your child or partner could end up in a lot of trouble.