Joint Credit Card: Is Getting One Right For You?
Joint Credit Card: Is Getting One Right For You?
Joint Credit Card: Is Getting One Right For You?
Joint Credit Card: Is Getting One Right For You?
January 16, 2024
January 16, 2024
January 16, 2024
January 16, 2024
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Money plays a pivotal role in our lives, and managing it can be challenging at times. Add a shared responsibility and that challenge becomes that much more difficult. Whether it’s your significant other, spouse, or business partner, there comes a time when you need to work with somebody when it comes to finances.
One way to do this is by getting a joint credit card. A joint credit card can be a great second credit card for you because it lets you create a shared record of your expenses with another person. If you’re interested in joint credit cards, keep reading to learn what they are, how they work, and the advantages and disadvantages of having one.
Money plays a pivotal role in our lives, and managing it can be challenging at times. Add a shared responsibility and that challenge becomes that much more difficult. Whether it’s your significant other, spouse, or business partner, there comes a time when you need to work with somebody when it comes to finances.
One way to do this is by getting a joint credit card. A joint credit card can be a great second credit card for you because it lets you create a shared record of your expenses with another person. If you’re interested in joint credit cards, keep reading to learn what they are, how they work, and the advantages and disadvantages of having one.
What is a joint credit card?
A joint credit card allows for two people to share a credit line. Both people on the account will get their own credit card to use and are held equally accountable for paying off the charges linked to that account.
One thing worth noting is that not all financial institutions have joint credit cards available so it’s important to do your research before going to open a joint credit card account.
Depending on your intentions, joint credit cards are used for personal or business purchases. Any activity on the card, both good and bad, will affect both cardholders.
How does a joint credit card work?
Just like most traditional credit cards, all applicants must provide their personal and financial information when applying for a joint credit card account. The card issuer will ask for things like income, employment status, and card history.
Once approved, both cardholders will receive their own card with the names of both cardholders. You can use the card and start to make purchases and withdraw cash.
As previously mentioned, both people are responsible when it comes to paying off any credit card debt that has accumulated. Whether it’s a 50/50 split or one pays 100%, the full payment needs to be made otherwise both cardholders will be penalized.
What is a joint credit card?
A joint credit card allows for two people to share a credit line. Both people on the account will get their own credit card to use and are held equally accountable for paying off the charges linked to that account.
One thing worth noting is that not all financial institutions have joint credit cards available so it’s important to do your research before going to open a joint credit card account.
Depending on your intentions, joint credit cards are used for personal or business purchases. Any activity on the card, both good and bad, will affect both cardholders.
How does a joint credit card work?
Just like most traditional credit cards, all applicants must provide their personal and financial information when applying for a joint credit card account. The card issuer will ask for things like income, employment status, and card history.
Once approved, both cardholders will receive their own card with the names of both cardholders. You can use the card and start to make purchases and withdraw cash.
As previously mentioned, both people are responsible when it comes to paying off any credit card debt that has accumulated. Whether it’s a 50/50 split or one pays 100%, the full payment needs to be made otherwise both cardholders will be penalized.
How To Apply For A Joint Credit Card
The first thing to do when applying for a joint credit card account is to find which credit card issuers offer them. It’s worth noting that not all financial institutions offer these types of accounts anymore.
In order to be eligible, both potential cardholders will require a certain credit score and must be able to show they’re able to handle credit responsibly. On top of that, issuers will probably want to know each person’s employment status, their income, and if there are any other existing debts to their name before being approved.
The actual application process is quite similar to an individual credit card. You’ll need to support your social security number for each partner, as well as current address and you may need to bring in recent bank statements as proof. In order to avoid setbacks, make sure all the information you provide is accurate when applying for a joint credit card.
Pros of having a joint credit card:
With any financial decision comes its pros and cons. Here are some of the advantages of having a joint credit card:
Helps build shared credit history: If you stay on top of your payments and keep your card balance low, having a joint credit card can help improve your credit scores.
Ease of tracking expenses: Joint credit cards allow cardholders access to the same credit card statement so all your expenses are in one place. Household finances and things like your budget can all be viewed in one place so no need to worry about different statements from multiple cards.
Maximize rewards: If you use your joint credit card strategically, you can maximize your rewards by sharing the miles or points earned from purchases made by both of the cardholders.
Cons of having a joint credit card:
Every positive also comes with their counterpart, so here are all the disadvantages of joint credit card accounts:
Impact of credit score: Having a joint credit card can be like a double edged sword when it comes to credit. If either of the cardholders misses a payment or is late, both of your credit scores will be impacted negatively.
Equal responsibility for debt: Regardless if your partner makes more purchases than you and spends more money, you’re just as liable for making sure all of the payments are made on time. Joint credit cards can be difficult to manage, especially for those with different spending habits.
Getting out of a joint account: If there are any relationship problems that arise between the two cardholders, it can be a complex and challenging process to get out of a joint credit card account. There may be legal actions to consider, or you might have to pay off all the debts accrued on the card before transitioning to a traditional account.
Alternatives To Joint Credit Cards
If getting a joint credit card isn’t right for you, here are some other options you might be interested in:
Open A Secured Credit Card
One alternative to joint credit cards is opening a secured credit card. The way these cards work is you deposit upfront what your credit limit is. In doing so, the card issuer has less risk because users show to the bank they have that money. It’s a great way to help build your credit so you can qualify for better credit cards down the road.
Adding an Authorized Card User
If you feel that a joint credit card account isn’t for you, then you could always add an authorized user to your account. One of the main differences between a joint credit card and an authorized user account is that authorized users are allowed to use the card as they please but aren’t legally liable for making any payments. Some card issuers will let you put a cap on how much the authorized user can spend.
Another difference between the two is that an authorized user doesn’t need to have their credit score checked before they get their credit card. If the cardholder who is adding an authorized user to it has a good credit score and has good habits, the authorized user can reap the benefits and also increase their credit score.
Having a Co-Signer
Having a co-signer allows you to apply for your own credit card under your name and insures the bank that if you can’t make a payment, the co-signer will. This will increase the chances of the bank approving your request and may also get you more favorable rates and higher spending limits.
Getting somebody to be a co-signer is great for people who are trying to build their credit score from nothing or looking to rebuild it altogether. Given the risk for the co-signer, it’s important they are co-signing for somebody they can trust.
Get Separate Cards
The last joint credit card alternative is to just open two separate credit cards. Instead of one being responsible for the other’s spending habits, you can just open different accounts. This will allow each individual to be responsible for their actions. No commitments or liabilities for the other person.
Should You Get A Joint Credit Card
Joint credit cards can be a great way to streamline your finances with your partner and share credit responsibilities. If you work well together as a team, you can reap the rewards and increase both of your credit scores.
It’s crucial to make sure the both of you are on the same page when it comes to setting limits for how much you spend with that account. Although many people think credit card debt is unavoidable, there’s many ways that clear communication can solve that misunderstanding. If your partner has the same intentions as you with financial goals then getting a joint credit card can be right for you.
FAQs on Joint Credit Cards
What banks offer joint credit cards?
As we discussed, not as many financial institutions offer these types of credit cards anymore. Some that still do are PNC Bank, U.S Bank, Alliant credit union, and Capital One.
Do joint credit cards build credit for both people?
Yes, both cardholders on the account will improve their credit score if they make their monthly payments on time and keep their spending habits in tact. On the other hand, both people can see their credit score dip if they miss payments or constantly use most of their credit available to them.
Can I add a joint account user to my existing card?
No, a joint credit card account must be opened between the two cardholders individually. If you want to add somebody to your existing credit card, you can add them as an authorized user.
How To Apply For A Joint Credit Card
The first thing to do when applying for a joint credit card account is to find which credit card issuers offer them. It’s worth noting that not all financial institutions offer these types of accounts anymore.
In order to be eligible, both potential cardholders will require a certain credit score and must be able to show they’re able to handle credit responsibly. On top of that, issuers will probably want to know each person’s employment status, their income, and if there are any other existing debts to their name before being approved.
The actual application process is quite similar to an individual credit card. You’ll need to support your social security number for each partner, as well as current address and you may need to bring in recent bank statements as proof. In order to avoid setbacks, make sure all the information you provide is accurate when applying for a joint credit card.
Pros of having a joint credit card:
With any financial decision comes its pros and cons. Here are some of the advantages of having a joint credit card:
Helps build shared credit history: If you stay on top of your payments and keep your card balance low, having a joint credit card can help improve your credit scores.
Ease of tracking expenses: Joint credit cards allow cardholders access to the same credit card statement so all your expenses are in one place. Household finances and things like your budget can all be viewed in one place so no need to worry about different statements from multiple cards.
Maximize rewards: If you use your joint credit card strategically, you can maximize your rewards by sharing the miles or points earned from purchases made by both of the cardholders.
Cons of having a joint credit card:
Every positive also comes with their counterpart, so here are all the disadvantages of joint credit card accounts:
Impact of credit score: Having a joint credit card can be like a double edged sword when it comes to credit. If either of the cardholders misses a payment or is late, both of your credit scores will be impacted negatively.
Equal responsibility for debt: Regardless if your partner makes more purchases than you and spends more money, you’re just as liable for making sure all of the payments are made on time. Joint credit cards can be difficult to manage, especially for those with different spending habits.
Getting out of a joint account: If there are any relationship problems that arise between the two cardholders, it can be a complex and challenging process to get out of a joint credit card account. There may be legal actions to consider, or you might have to pay off all the debts accrued on the card before transitioning to a traditional account.
Alternatives To Joint Credit Cards
If getting a joint credit card isn’t right for you, here are some other options you might be interested in:
Open A Secured Credit Card
One alternative to joint credit cards is opening a secured credit card. The way these cards work is you deposit upfront what your credit limit is. In doing so, the card issuer has less risk because users show to the bank they have that money. It’s a great way to help build your credit so you can qualify for better credit cards down the road.
Adding an Authorized Card User
If you feel that a joint credit card account isn’t for you, then you could always add an authorized user to your account. One of the main differences between a joint credit card and an authorized user account is that authorized users are allowed to use the card as they please but aren’t legally liable for making any payments. Some card issuers will let you put a cap on how much the authorized user can spend.
Another difference between the two is that an authorized user doesn’t need to have their credit score checked before they get their credit card. If the cardholder who is adding an authorized user to it has a good credit score and has good habits, the authorized user can reap the benefits and also increase their credit score.
Having a Co-Signer
Having a co-signer allows you to apply for your own credit card under your name and insures the bank that if you can’t make a payment, the co-signer will. This will increase the chances of the bank approving your request and may also get you more favorable rates and higher spending limits.
Getting somebody to be a co-signer is great for people who are trying to build their credit score from nothing or looking to rebuild it altogether. Given the risk for the co-signer, it’s important they are co-signing for somebody they can trust.
Get Separate Cards
The last joint credit card alternative is to just open two separate credit cards. Instead of one being responsible for the other’s spending habits, you can just open different accounts. This will allow each individual to be responsible for their actions. No commitments or liabilities for the other person.
Should You Get A Joint Credit Card
Joint credit cards can be a great way to streamline your finances with your partner and share credit responsibilities. If you work well together as a team, you can reap the rewards and increase both of your credit scores.
It’s crucial to make sure the both of you are on the same page when it comes to setting limits for how much you spend with that account. Although many people think credit card debt is unavoidable, there’s many ways that clear communication can solve that misunderstanding. If your partner has the same intentions as you with financial goals then getting a joint credit card can be right for you.
FAQs on Joint Credit Cards
What banks offer joint credit cards?
As we discussed, not as many financial institutions offer these types of credit cards anymore. Some that still do are PNC Bank, U.S Bank, Alliant credit union, and Capital One.
Do joint credit cards build credit for both people?
Yes, both cardholders on the account will improve their credit score if they make their monthly payments on time and keep their spending habits in tact. On the other hand, both people can see their credit score dip if they miss payments or constantly use most of their credit available to them.
Can I add a joint account user to my existing card?
No, a joint credit card account must be opened between the two cardholders individually. If you want to add somebody to your existing credit card, you can add them as an authorized user.
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