It can be difficult for married couples to manage their money together, especially if they are not always on the same page. In particular, credit cards can make it easy for one person to overspend using money that the household might not have in its budget. If you’ve had a situation where your spouse has spent too much on your credit cards, what can you do?
Talking About It
Having discovered that your spouse has been spending heavily on your credit cards, the first thing that you will want to consider is talking about it. It’s a good idea to start by giving your spouse the benefit of the doubt, simply asking for more information about the charges.
For example, a credit card statement might offer vague or misleading information about the name of the merchant, so it can be very easy to confuse a large charge that you were expecting with one that you weren’t. In addition, it’s always possible that what appears to be a spending spree might actually be the result of fraudulent charges, which you can dispute with your card issuer.
Thankfully, federal law protects credit card users from paying more than $50 in the event of a fraudulent charge, and all major card issuers will waive this amount by offering zero-liability policies. By sitting down together and going over each charge, couples can ensure that they understand exactly what was purchased and what wasn’t.
If you’ve determined the charges are legitimate, you’ll want to consider going over your total financial picture to see how these charges will affect you. And if you’re unable to pay your entire statement balance by the due date, you should also try to calculate the cost of interest charges.
Taking Steps to Minimize the Impact
Once you have talked it over, it may become apparent to both of you that your spouse overspent. The most effective way to minimize these expenses is to look into returning some unnecessary purchases. In fact, many credit cards come with a return protection policy that can offer you a refund on eligible purchases, even when the retailer won’t accept a return.
After you’ve returned everything you can, your next step will be to minimize any interest charges. You can avoid all interest charges by paying your balance in full, but if that’s not possible, then there are other steps that you can take. For example, you can pay as much as possible, as soon as possible, in order to reduce your average daily balance, which determines how much interest you are charged. You can even save money on interest charges by making multiple payments each month, as money becomes available. You also can cut back on other spending as you apply more of your monthly budget to paying off the debt.
Another strategy to minimize your credit card interest is to open a new account that offers 0% APR promotional financing on balances transfers. These offers allow you to avoid interest charges by transferring balances from your existing cards to a new credit card that offers interest-free financing. These promotional financing offers last from as little as six months to as long as a year or more, however, nearly all of these offers require payment of a balance transfer fee of 3 to 5%, which gets added to your new balance.
Preventing It From Happening Again
Once you’ve tried to manage your existing charges, you can take steps to ensure neither of you overspend with credit cards in the future. For example, some couples agree to notify each other before making any charges above a certain amount, such as $100. In many cases, you can manage your credit card accounts online and create automated alerts that send both of you an email or a text message when any charge above a certain amount is made, or when your balance crosses a predetermined threshold.
Finally, some couples may choose to separate their finances rather than manage their accounts jointly. This allows you to avoid financial problems caused by your spouse’s overspending, but it can also make it more difficult to work together to budget your money and control overspending.
It’s often said that communication is the key to any successful relationship, and this advice is especially true when it comes to married couples managing their finances together. By talking about your credit card use, and taking steps to mitigate and prevent overspending, couples can work to manage their credit card accounts responsibly.
Remember, carrying high credit card balances can have a negative effect on your credit scores. You can see how your credit card spending is impacting your credit by checking your two free credit scores, updated monthly, on Credit.com.
Image: Drazen Lovric