Updated: 9/14/2011 4:58 PM ET|
Ready to say 'I do' to joint credit?
Here are 6 questions you and your partner need to ask each other before you share a credit card. If you don't, you could be in for money trouble and heartache.
You've shared dinner, vacations and maybe even an apartment with your sweetie. But one of the biggest steps you can take with your significant other is sharing financial responsibility through a joint credit card.
"This is a huge commitment," says Kim McGrigg, a spokeswoman for Money Management International, a national credit counseling company. "I think it's something that most people just don't take seriously enough." Merging finances cannot save a relationship, but it can easily destroy one.
You don't have to be hitched to get a joint credit card. Bank of America spokeswoman Betty Riess says her company, for example, has "no special policies about issuing joint accounts to unmarried couples." Gail Hurdis, a spokeswoman for Chase, says any two people can choose to get a joint Chase credit card account.
That said, it's probably best if your own policies are stricter than those of the credit card companies. After all, a financial mistake on a joint credit card can haunt you long after a relationship has ended. So if you're not married, but you're thinking about opening joint credit, be sure you've talked through these six important questions before you sign on the dotted line.
1. Is it really time to merge our finances? Joining financial forces can have a lot of benefits: It can add psychological heft to a relationship, it can encourage openness about money, and it can simplify any joint purchase you make, from a couch to a car. But it also can make things more complicated if your relationship does not last, says Gail Cunningham, a spokeswoman for the National Foundation for Credit Counseling. "Undoing a financial arrangement can be very difficult," she says.
2. Would a card with an authorized user work just as well? A joint credit card makes both users legally responsible for the bill -- even if it's just one person who runs up the balance. "When a relationship goes sour, people can be vindictive," says Cunningham. That's because some people become so angry that they don't care about the potential effect of their actions on their credit. "They'll run up a balance and then file for bankruptcy if that means you'll be responsible for paying off the bill," she says.
One way to avoid this problem is simply to add your significant other as an authorized user to your card. Because you are the actual cardholder, you'll have the power to cut off your sweetie's access if he or she misbehaves financially.
3. Do I know everything important about my significant other's financial past? It's acceptable to overlook a lot of your significant other's flaws, but glossing over a spotty financial history could have a serious impact on your life.
"It's probably the most unromantic date idea ever, but you should consider pulling your credit reports and going over them together," says Liz Weston, an MSN Money columnist and the author of "The 10 Commandments of Money." Look at the report with the same careful eye that any potential creditor might, she adds. "Do they pay their bills on time? Do they have big debts or accounts you didn't know about?" If you see anything that looks fishy, it may be time to put the brakes on your financial merger.
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The seventh question should be:
Are you nuts????
If you want to be complete partners, then get married.
You don't have to be nuts to have a joint account. In fact, I think it works great as long as accounts are managed correctly. I recently joined accounts and it has been a great improvement for our funds, debts, and accounts. All of the accounts are designated so we have an account to pay down debt, one for housing needs, one for emergency, a savings account ofcourse, and our own separate accounts for our own personal needs. The personal account is always a MUST. We all need our own personal money without going overboad and spending more than one should. This eliminates problems in the long run.
Never merge finances with ANYONE...EVER and always get a prenup...this is an age of atleast one divorce. Even if you were/are in love with someone, the only person you can control is YOURSELF...and many times other people dont take care of their finances as well knowing they have a partner to lean on.
Keep everything separate....even when married. The person you divorce is never the same person you married. Even if you are thinking "we'll never divorce"...you have no control over the outcome if your partner decides they want one. Always protect yourself..even when in love...
P.s- Im single and never married but have seen several disasters that opened my eyes!!!
I'll go a step further to say, if your partner is insisting on sharing any credit, this is a HUGE warning sign. Turn and run. Yes, I know it's sweet and hot, but...
Don't say I didn't warn you
Do yourself a favor, and don't! My spouse and I did, I used credit consevatively, while he didn't.. He got his credit in a mess. I already had my own credit standing without him, and separate bank accounts. When he passed away, I had to pay everything that included my name, even though they were his charges. Your home should be in both of your names, as should your title to vehicles. Keep your credit cards to yourself.
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