How Do My Spouse & I Apply for a Credit Card Together?

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Couples can gain several advantages when they decide to manage their finances together. First, they can save time by managing fewer accounts. In addition, each person can leverage their financial strengths for the benefit of the household by saving, budgeting and paying bills. Finally, couples can pool together their income, investments and other resources without having to account for who was originally responsible.

When couples manage their finances, they may choose to apply for a credit card together. However, there are two ways that two people can be on a credit card account.

Opening a Credit Card as Joint Account Holders

One way that two people can apply for the same credit card is as joint account holders. With this type of account, both spouses essentially act as the primary cardholder. Both can make charges, make changes to the account, and redeem rewards. But in addition, both cardholders are individually responsible for the repayment of all debts, regardless of who made the charge. Even if one spouse makes all of the charges but doesn’t pay any of the bills, the other spouse is still responsible for repayment. Furthermore, payment history of the account will be reflected on the credit reports of both spouses.

With a standard checking or savings account, it can be quite easy to simply add a joint account holder. But with a credit card account, it’s not that simple. Only a few banks still offer this option, and in most cases, the account must be originally opened as a joint account — you can’t add a spouse to an existing account.

In 2013, Chase announced it would cease offering joint credit card accounts, and other major banks, such as HSBC and Capital One, have followed. Currently, Bank of America, U.S. Bank and Discover still allow customers to open joint credit card accounts.

Adding a Spouse as an Authorized User

A much easier way for a couple to share a credit card account is for the primary account holder to add a spouse as an authorized cardholder. Authorized cardholders receive their own credit card and can make charges to the primary cardholder’s account. However, the primary cardholder is only responsible for repayment and can remove authorized cardholders from the account at any time. In addition, authorized cardholders are not able to perform many account management tasks, such as reporting a card lost or stolen or redeeming rewards — and not all issuers report authorized users to the three major credit reporting agencies.

Pros & Cons to Both Arrangements 

The advantage of a joint account is that both spouses are equal in the eyes of the card issuer. Each has all of the authority and responsibility that they would have if they were the sole account holder. It’s also possible to open a joint account if one spouse has poor credit and the other has much better credit.

However, if the couple separates or divorces, both spouses are still responsible for repaying the debt, and any negative payment information will be reported on the credit histories of both spouses. And if one spouse should die, the survivor will generally still be responsible for repaying the debt.

When you add a spouse as an authorized cardholder, it also has several advantages and drawbacks. On the plus side, adding an authorized cardholder is simple, and can be done with just a quick telephone call. In addition, other cardholders are not financially responsible for debts, which could be an advantage to the authorized cardholder, or a disadvantage to the primary accountholder, depending on how you look at it. For the authorized user, it can be frustrating to be unable to perform some basic tasks on the account, such as redeeming rewards.

By understanding the different ways that couples can open a credit card account together, you can choose the type of account that works best for your needs. If you’re considering whether to apply for a rewards credit card, be sure your credit is in solid shape beforehand. You can see where your finances stand by viewing a free snapshot of your credit report, updated every 14 days, on Credit.com.

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Can I Kick My Parents Off Our Credit Card?

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Sometimes, removing your name from your parents’ credit card (or vice versa) has its advantages. For starters — it’s kind of nice to handle your own bills without getting the glowering stink eye about your spending sprees on the card’s statement. And while you’re on the card, your credit is generally linked to your parents’ credit, so if your parents are irresponsible, you’ll look irresponsible too, said Eric Lindeen, vice president of marketing for ID Analytics in San Diego, California.

“It can be a great financial head start to be listed on a parent’s card, but [it] can become awkward or damaging if their credit isn’t sterling,” he said.

To get an idea of how your parents’ card use may be affecting your credit, it’s a good idea to check your credit report. That’s because if your name is listed on a shared credit card account, the good and bad habits of all users can show up on your credit report.

“It should be easy to spot problems and decide if you should remove yourself from the card,” Lindeen said. “A horrible card will be less than a year old, maxed out, with multiple late payments.”

You can pull your credit reports for free each year at AnnualCreditReport.com. You can also watch for changes by viewing two of your credit scores for free every 14 days on Credit.com. If you ultimately decide it’s time to go your separate credit ways, the next steps vary, depending on how the account is shared. Here’s a rundown of your options.

1. If You’re an Authorized User on Your Parent’s Card

You can breathe a huge sigh of relief if you’re an authorized user, because you’ll have no responsibility for repayment of the credit card’s debt, according to Rod Griffin, director of public education at credit bureau Experian. If you want to come off the account, call the card company to learn its policy for removing your name. It normally only takes a call to remove authorized users, although the issuer may request a letter, or for the person responsible for the account to contact them directly, which could admittedly get awkward.

“The biggest challenge in a situation like this is having the conversation with the parent (or more often, the child) to explain the action. We can hope they accept graciously,” said Lindeen.

In addition to contacting the card issuer, you should also get in touch with the three major credit reporting agencies to have the account removed from your credit report.

“Experian will remove authorized user accounts from the credit history upon request,” said Griffin. This step is particularly important if your parents’ credit card habits are a little irresponsible.

You can go here to learn about disputing errors on your credit report.

2. If Your Parent Is an Authorized User on Your Account

Let’s say you were helping your parent rebuild credit by adding them as an authorized user to one of your accounts, but the process has gone awry: You can call to have them removed from the account. However, keep in mind, while this removal can prevent future problems, it won’t eliminate any black marks mom or dad have already added to your credit report.

“An authorized user can definitely damage a primary cardholders’ credit report, as the primary cardholder assumes all responsibility for the [authorized user’s] activity,” said Sukhi Sahni, director of communications and marketing public relations for Capital One.

In other words, as a primary accountholder, you’re considered liable for the debts your parents may have run up — and, if those debts caused you to miss any payments on the card, you’ll have to wait for those to age off of your credit report.

3. If It’s a Joint Account

If you are a joint accountholder on the card in question, you can move to have the account closed. Either party can unilaterally close the account by contacting the card issuer over the phone or in writing. Once closed, the cards of both joint account holders and any authorized cardholders will be deactivated, and any future attempt to make purchases will be declined. But both parties are generally still considered on the hook for any debt remaining on the card. And, yes, those debts and/or missed payments will likely appear on your credit report until they’re paid down or age off, respectively.

 

Image: monkeybusinessimages

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