6 questions to pop before you open joint credit with your sweetie
It may be the worst date ever, but talk finances before opening an account together
By Erin Peterson
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 of 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 can't save
a relationship, but it can easily destroy one.
don't have to be hitched to get a joint credit card-Bank of America
spokeswoman Betty Riess says that her company, for example, has "no special
policies about issuing joint accounts to unmarried couples." Gail Hurdis, a
spokeswoman for Chase, concurs that 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 that 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 unmarried but thinking about opening joint credit, be
sure you've talked through these six important questions before you sign on the
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 make joint purchases -- from a
couch to a car -- a simpler process. But it can also get complicated if you
and your significant other don't last, says Gail Cunningham, 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
circumvent this problem is to add your significant other as an authorized user to your card. As the cardholder, you'll have the power to cut your sweetie
off if he or she starts misbehaving 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, 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 might be time to put the brakes on
your financial merger.
4. Are we both on
the same page financially? Because this isn't a decision to take
lightly, you need to be completely open with your significant other. "You
want to have a discussion about your partner's priorities and financial goals. What are their values? Do they have a plan for the coming
years?" says McGrigg. It may sound more rigorous than a job interview, but
when you enter into a financial commitment, you'll need to have a serious
conversation. After all, if one person plans to quit working a 9-to-5 job
to start a new company funded with credit card cash advances, it's
best to know that before both of you are paying the price of that
5. Have we agreed
on what expenses are appropriate to put on the card? It might be
obvious to you which expenses should be put on the card and which shouldn't,
but one person's obvious may be another person's "Whaaaa?" Talk
about it beforehand. Discuss the types of expenses and total dollar
amounts that make sense for your budget, says Weston. "You don't want to have to check with the other person for
every $5 purchase, but you don't want your beloved going out there and
buying a whole new wardrobe or motorcycle, either," she says. "You have to
figure out when you'll check in with the other person. There's no hard-and-fast rule, but it's a conversation you should have before you get the
6. Do we know who
will handle the day-to-day management? It's critical to make sure that
you and your honey have the same basic financial goals and philosophies,
but it's also critical to make sure your card is getting paid on time every month, says McGrigg. "Having a conversation about
logistics is a great idea," she says. "There's a lot of boring, but
incredibly important paperwork that goes along with managing a credit card
and taking care of the account." From checking for unauthorized expenses
to paying the bill, you need to make sure that one of you will be taking
care of the details.
If you're comfortable with the
answers to these questions, you're probably ready to make the plunge with a
joint credit card.
See related: Tips for making sure your bills are paid on time
Published: February 25, 2011