Opening a business with a partner: Should you apply for a joint card together?

Getting a joint bank account and each applying for a card separately might be wiser

Your Business Credit with Elaine Pofeldt

Elaine Pofeldt is a journalist whose articles on entrepreneurship and careers have appeared in Fortune, Working Mother, Money and many other publications. She is a former senior editor at Fortune Small Business magazine and an entrepreneur herself, as co-founder of 200kfreelancer.com. Her book, “The Million-Dollar, One-Person Business,” was released in 2018. She writes "Your Business Credit," a weekly column about small business and credit, for CreditCards.com.

Ask Elaine a question, or see if your question has already been answered in the Your Business Credit answer archive.

My boyfriend and I want to open a café. Is it a good idea to apply for a joint credit card together?

When you apply for a joint credit card account, you will both share responsibility for the debt. That can be problematic down the road.

A better alternative can be to open a joint bank business account, and then apply for cards separately for use in the business.

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Check out all the answers from our credit card experts.

Dear Your Business Credit,

My boyfriend and I are talking seriously about starting a café together. He suggested we apply for a joint credit card account together.

Should I do it? He has one credit card in his name and seems to pay it on time. I have good credit, also. – Sondra

Dear Sondra,

Congratulations on starting your business. When you apply for a joint credit card account, you will both share responsibility for the debt. That may not be a problem at the moment, because your boyfriend seems to be responsible in managing his finances.

Still, when applying for joint credit, it’s important to consider what your situation would be like if something went wrong – including the worst-case scenarios.

You didn’t mention how long you have been a couple. For any couple considering getting joint credit, it’s important to consider the possibility that you could break up and what you would do if that happened.

See related: Which cards let you be a co-signer, joint account holder 

Possible perils of opening a joint credit card

Having a joint credit card could put you in a tricky situation if you have run up a balance on the account that is substantial and will take a while to pay off – and you later want to separate your credit from his.

Even if you and your boyfriend worked out an amicable agreement where he would pay you back his share every month until the balance was gone, you’d have to ask the credit card issuer to remove him from the account if you wished to separate your credit in the interim.

If the credit card issuer doesn’t think you have the ability to pay it down on your own, it may not be willing to remove him. Your only way of separating your credit from his will likely be to pay down the balance and ask for the card to be canceled.

Tip

Tip: Have a good sense of how much it actually costs to start a business. Make sure you have enough capital to cover lease, furniture, décor, equipment and employee salaries without running up a balance on your credit card.

A better option: A joint business bank account

This is what I’d recommend in your situation:

  • Set up a joint business bank account for the business.
  • Then, apply separately for credit cards for use in the business.

Generally, business owners have to personally guarantee small-business credit cards, so your ability to get your own card will depend on your and his own credit.

See related: How business owners chose their credit cards

Finding capital to launch your small business

For a café, it’s possible you may have to come up with a fair amount of startup capital to cover your lease, furniture and décor, equipment and supplies.

  • Make sure you have a good sense of how much it actually costs to start a business such as this and amass as much startup capital as you can through savings or outside investment. This way you won’t be forced to run up debt just to keep the doors open in the early months before customers know you are there.

  • Talk to a real estate broker in the target community or location where you want to open up your café, and find out how much it would cost to get a lease.

  • Price furniture for the café and any needed equipment with a restaurant supplier.

  • If you are going to need to hire employees, check out the online help wanted ads to find out what the going rates are. Then come up with a startup budget.

Launching a business: Use cards wisely

You may discover that it pays to take the next six months or a year to save up money now so you have adequate startup capital and don’t have to run up a lot of debt.

Credit cards can be a good way to extend your cash flow once the business is rolling, but you don’t want to lean on them for all of your financing. Good luck!

See related: How should I fund my small business?


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Updated: 11-16-2018