Let’s get this out of the way right up front: It is generally a terrible idea to open a joint credit card. Yes, there are exceptions, but there are so many pitfalls stretched across the broad variety of personal relationships that exist, that you are asking for trouble.
There’s a line in Shakespeare’s “Hamlet” worth noting: “Neither a borrower nor a lender be, for a loan oft loses both itself and friend.” I’m not saying don’t borrow money – that’s what NerdWallet is all about. Credit is good. But I’ve lost many a friend over money being lent, and when that money takes the form of a credit card, it’s even worse.
What if you have stronger or equal credit?
Let’s assume you are the person with the better credit of the pair, when considering a joint account. Why would you risk your good credit adding someone to your account whose own credit habits may not be as good as yours. You’re setting yourself up for them to muck up your credit score if they overspend and either of you can’t afford to pay.
Perhaps you are both equally responsible with credit. That’s fine, but what if the relationship deteriorates? I’m not speaking merely of a marriage, but of all relationships. You may open an account with a child or parent, or a caretaker, or a business manager. The ugly and unfortunate truth is you just don’t know when things might turn south. If they do, you are tied to that person as far as the account’s ultimate destiny.
Imagine this scenario: You are married. You have a joint credit card. One month you get a statement and find your spouse has changed his or her spending habit from $1,000 a month to $10,000. Yikes! You go and ask them about it. “Whoops. Lost track this month. So sorry. I’ll return some stuff and be more careful.” Three days later, you get hit with divorce papers. This person now has leverage over you in divorce proceedings. They could refuse to pay their share of the bill, and in the process harm your credit. In any event, they’ve purchased ten grand worth of stuff of which you will be responsible, at a minimum, for half of that. You don’t even get to enjoy the new plasma TV he purchased and had shipped to his apartment. Yes, he got an apartment in the meantime.
What if you have weaker credit?
This is just one of an infinite number of situations that you will think can never happen to you, until it does. The only reason to set up a true joint account, as opposed to one with an authorized user, is if you are the one with weaker credit. It’s unlikely your partner will, after years of having good credit, torpedo it. You’ll reap the benefits of better credit.
Parents, this advice includes your children. It’s harsh, but you just never know what they might be up to. Plus, it’s better for them to build good credit on their own.
Bottom line: Keep that credit card in your name only. Some banks, without explaining why, are even eliminating joint accounts. Perhaps they know something we don’t.
Twins image via Shutterstock