[Disclosure: Our partners are mentioned below.]
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.