Dealing with a spouse's secret credit card debt
To Her Credit
Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006). She writes "To Her Credit," a weekly reader Q&A column about issues involving women, credit and debt, for CreditCards.com, and also writes regularly for MSN Money, Interest.com and Bankrate.com, and has guested on Martha Stewart Radio and other programs. See her website SallyHerigstad.com
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Dear To Her Credit,
My husband just informed me that he has been hiding $25,000
of debt from me. We have been married two years. I knew he had debt when we
were dating. It was approximately $15,000. We put a plan together, he worked
two jobs and it was paid down. Or so I was told. In reality, the debt shrank to
approximately $3,000 and eventually ballooned back up to $25,000. He has been
at the $25,000 debt level for one or two years, as he has just paid the
I have now paid off all of the debt with a lump sum of cash
from my checking account. My question pertains to his credit score. He has
agreed to not have a credit card again, but is concerned about his credit score.
The debt was spread over six cards, and I would like to cancel all of them. The
last card was opened around 2010. Are there any adverse consequences to closing
all of the cards? Any advice you can provide would be greatly appreciated. -- Lena
Your husband spent $25,000, hid the bills and after he
confessed, he let you pay it all off with money from your checking account.
And now the biggest thing you two seem to be worried about now is whether his
credit score will take a hit if his cards are closed?
I'm arching my eyebrow.
If I were in your situation, I would be more concerned about
trust issues in my marriage. You seem to be in the mode of he breaks it, you
fix it. He promises to be good; you figuratively take away the car keys. But he
is an adult, and there's only so much you can do to keep him from spending
money. Whether you close all six of his cards or not, who's to stop him from
opening six more next month? Unless you build up financial trust in your
marriage, you're headed for trouble.
The good news is that building that trust in your marriage
is not only possible, but it's been done by many couples who have been through
similar situations. For that to happen, however, you have to both be willing to
do two things: 1) start working together as a team; and 2) practice financial
Working together as a team means you both pull your weight.
You don't have to make the same income or even both contribute monetarily, but
you should have common goals and both be working toward them. A win for one of
you should be a win for both.
You can learn to be on the same team by studying personal
finance books together or taking a local personal finance class. It can even be
fun to work on finances as a project together. Not everyone is going to feel
that way, but at least you can have a new sense of purpose as a couple.
Practicing financial transparency builds trust. If one of
you is intercepting the mail for any reason other than a surprise present, that
trust level goes down.
Transparency does not mean one marriage partner dominates
and controls the other. That doesn't work, because people who can't spend
anything without getting yelled at eventually rebel. This is where a budget,
agreed to by both of you, actually gives you freedom. You agree ahead of time
that X amount of money is for groceries and X amount is "walking
around" money you don't have to account for at all. Some people have a
given amount, say $100, depending on your situation, that they can spend
without consulting the other. That gives each person enough freedom, without
suggesting it's OK to buy a motorcycle on the way home.
To answer your question about whether closing six cards will
hurt your husband's credit, yes, closing all six of the cards at once will
lower his available credit and cause his score to go down. Closing them all may
not really help anyway, because he can just open new ones. I suggest closing
all but two or three of the cards anyway, just to simplify things. I recommend
keeping his oldest accounts open and closing some or all of the newer cards. Then, make
sure you both see the card statements every month. Resist the urge to complain
about small items or the statements might go "missing" next month.
Staying out of debt is more important than worrying about a
few credit score points you might lose by canceling excess credit cards. Sure, you'll want
to keep a couple of cards. But if you take care of your finances first, for the
most part your credit score will take care of itself.
See related: Poll: About 6 million in U.S. hid bank accounts from spouse, partner, Who pays secret debt in divorce?
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