Applying or cosigning for a credit card with your loved one has its risks. The credit card and its activity appears on both of your credit reports, and you're both responsible for the balance. If your loved one has good financial habits, however, a joint credit card account also comes with a lot of perks. From helping you combine your finances to building credit and racking up rewards, a joint credit card is a great financial tool for couples. Here are seven reasons why you should open one.
1. Earn credit card rewards faster
A credit card rewards program offers one of the fastest and simplest ways to earn freebies. If your card features this perk, you can earn points or cash back on every purchase. After you accumulate enough points, you can redeem them for merchandise, travel, statement credits, or cash. But even if you're earning one point or 1% cash back on every dollar you spend, it takes time to accumulate rewards. A joint credit card, on the other hand, helps you rack up more points.
Since you and your loved one will have access to the same credit line, you will have more opportunities to earn points. In this way, a joint credit card can be an excellent tool if you and your partner are planning a vacation and want to accumulate as many points as possible to redeem for free airline tickets, hotel stays, and more.
2. Boost both of your credit scores
A joint credit card appears on both of your credit reports and affects both of your credit scores. This can be a good or bad thing depending on how the two of you manage the account. It might be your partner's responsibility to send payments each month. Just know that if he consistently makes late payments, your credit report will reflect this.
On the other hand, if you both manage the credit card responsibly by paying the bill on time and only charge what you can afford, both of your credit scores will benefit. A higher credit score means you'll be able to qualify for lower rates when applying for financing in the future.
3. Qualify for credit cards with lower rates
One in three U.S. adults say their households carry credit card debt from one month to the next, according to the 2015 Consumer Financial Literacy Survey prepared for the National Foundation for Credit Counseling. If you don't pay off your credit cards every month, it's important to find a card with the lowest rate possible. This reduces interest charges, allowing you to pay off balances faster.
Unfortunately, if you have less-than-perfect credit and apply for a credit card alone, you're not likely to get a low-rate card. The higher your rate, the more you'll pay in the long run. If you apply for a joint credit card with your partner, however, and they have excellent credit, you might qualify for a card with a lower rate and higher credit limit.
Your credit card company will evaluate both of your credit scores when determining whether to approve your joint credit card application. In some cases, one applicant's good credit history can compensate for the other applicant's fair or bad credit history.
4. You are more accountable for purchases
If you have your own credit card and you're the only one managing the account, it's easier to overspend, purchase things you don't need and ring up a huge credit card bill. When you share an account with your partner, there's an accountability factor.
"It just gives both parties a reason to pause a moment and give some extra thought before making a purchase. You know that another person will see what is being charged," said Joan Fradella, a certified family mediator at Divorce thru Mediation. "It causes you to think about whether you are being reasonable about your total charges compared to income."
When you're fully aware that another person will see every single charge you make -- and likely ask questions or become upset over unreasonable charges -- you're liable to be more responsible, forgoing impulse purchases and maintaining a reasonable balance.
5. Joint credit card accounts are easier to close
Nobody wants to think about death, but it's an unfortunate part of life. If your spouse dies, you might decide to close all of his or her personal credit card accounts after paying off the balances. But when you're not an account holder, shutting down an account for someone isn't as simple as calling the credit card company and making a request.
It's faster and easier to close a credit card account when you're a joint account holder. Marcia Noyes, director of communications at Catalyze, learned this lesson the hard way when her husband died in 2013. "With a joint credit card, one person can shut down the account when the other dies," she said. "Without it being a joint account, it takes an act of Congress -- death certificate, letters of testamentary, and your information."
6. Manage shared expenses more easily
If you share expenses with your spouse, such as groceries, entertainment or recreation, using a joint credit card might be one of the best ways to track and split expenses down the middle. Since everything appears on the statement, you'll know exactly what was spent between the two of you. You and your partner don't have to worry about exchanging money or writing each other a check. Simply use the joint credit card and then pay off your share of the balance.
7. You have full privileges and access
Getting a joint credit card isn't the only way to share an account with someone. You can also add someone as an authorized user to one of your credit cards. This person can use your credit card account, and this account might appear on his credit report, allowing him to benefit from your good credit habits. But since this person isn't a primary account holder, he doesn't receive the same privileges as a joint account holder.
He can't call the credit card company to inquire about balances, request a credit limit increase, ask for a lower rate, or dispute a charge. A joint account holder, however, has full account privileges.
Some people might discourage you from getting a joint credit card account because of the inherent risks. But depending on your situation, a joint account can be financially beneficial. When opening your joint credit card make sure you understand the risks and benefits, and only share a credit card if you trust that the other person will use the account responsibly.
This article originally appeared on GOBankingRates.com.
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