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In Financial Health or ‘Til Debt Do Us Part: Combining Credit Accounts for Couples

Credit Score, Personal Finance
how to combine credit accounts
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Opening a joint credit card with your sweetie means making a commitment, for richer or for poorer, to take on and pay off debt as a team. That can be complicated, especially if you haven’t spent much time talking about money before. Wondering how you can marry your credit accounts without damaging your finances? Here are some steps you can take, along with a few card recommendations to get you started:

1. Discuss spending and saving

Before you start sharing a credit card account or taking out loans together, sort through your finances. Schedule a weekly meeting with your partner to review budgets, credit statements and debt. Once you know about each other’s spending habits and personal financial goals, you’ll have a better idea of what to expect when sharing a credit account.

2. Set ground rules

It’s important to be upfront about your expectations with your significant other, especially when both of your credit scores are on the line. For example, agree to consult each other about charging purchases over $100 to a shared credit card, so you can be on the same page about any major spending. Talk about what you can do together to boost your credit scores, too. Generally, this means making on-time payments and using less than 30% of your credit limit. Once you agree on spending guidelines, write them down and post them where you can both see them.

3. Start slowly

Try sharing a single credit card account first before jumping into larger commitment, like a mortgage, with both your names on it. This way, you can iron out any communication problems and minimize the potential damage to your credit score. You can:

• Become joint cardholders: When you and your partner apply for a credit card together, you’re both responsible for the debt accrued on that account, regardless of whose bank account the card is linked to. Generally, issuers don’t allow you to add joint cardholders to existing accounts, so you’ll probably have to open a new account to take on this joint liability. Keep in mind that some major issuers, including Chase, American Express and Capital One, don’t offer this option.

• Add your partner as an authorized user: If you want to share your existing card with your partner, you can add him or her as an authorized user. Your S.O. won’t be legally responsible for payments if you do this. But in some cases, the issuer will report authorized user activity on credit reports, and that may help your partner build credit. To boot, some cards even give you extra rewards for sharing credit this way. The Chase Sapphire Preferred® Card, for instance, gives you 5,000 points after making your first purchase and adding an authorized user within the first three months.

If both of you pay off your balances on time, communicate openly and keep your spending under control, it probably won’t make too much of a difference how you share your credit. But if one of you runs up a large debt and falls behind on payments, or if you break up, it’s usually easier to resolve issues when one partner is an authorized user.

4. Choose a credit card and talk strategy

No matter how you plan to share your credit, make sure to look for a card that suits both your spending habits. For instance, if you both spend a lot of money on gas and groceries, consider getting the Blue Cash Everyday® Card from American Express, which offers 3% cash back at U.S. supermarkets up to $6,000 a year in purchases (then 1%), along with 2% cash back at U.S. gas stations and select U.S. department stores, and 1% on all other purchases.

Or maybe you just got engaged and you want to get a credit card to help earn rewards on all your wedding and honeymoon expenses. The Citi® Double Cash Card – 18 month BT offer may be a good option for you, because it gives you 1% cash back on all purchases and another 1% back when you pay them off.

It’s also a good idea to check your existing rewards programs and split different expenses between your cards. With certain card couplings, you’ll be able to maximize your rewards.

5. Over-communicate

When it comes to managing credit together, too much communication is better than too little. If you’re not sure whether you should buy that $90 chair using your shared credit card, for instance, send your partner a quick text before making the decision. And if it’s your honey’s turn to pay the monthly bill, give him or her a friendly reminder a few days early. Taking the time to do this can help you stay on top of your joint finances and prevent misunderstandings.

6. Plan for ‘what if’

Before heading to Splitsville, it’s important that you separate all your shared credit accounts to avoid any future financial snarls.  If you have a joint credit card, close the account. If you listed your ex as an authorized user on one of your cards, remove that name from your account. If you have any loans and mortgages in both your names, refinance them as soon as possible so that only one person is responsible for the balances owed.

It doesn’t matter whether you have a court order to split things; in the end, you’ll have to do the legwork and make sure all these accounts are closed. If you don’t, you could be on the hook for your ex’s spending, and your credit may suffer if debts aren’t paid on time.

7. Borrow carefully

When you’re sharing credit, it’s important to remember that your partner’s credit score could be affected by your spending habits. Because so much is at stake, it’s more important than ever to budget carefully and borrow only what you know you can pay back. With planning and communication, you’ll both be able to build good credit scores.

This article was updated Aug. 11, 2016. It originally published March 13, 2015.

Claire Tsosie is a staff writer covering personal finance for NerdWallet. Follow her on Twitter @ideclaire7 and on Google+.