When you are a military spouse, it may seem simpler to keep the family’s financial business in the active duty service member’s name. But whether you keep your money entirely divided or mix everything together, it is important that both partners have their own separate credit.
Some states need cars to be registered to the active duty member. You often file taxes in the servicemember’s state of legal residence. And your Tricare medical coverage is attached to your spouse’s job.
In addition, many couples choose to combine their finances when they marry. Many financial experts agree that can be a good thing, but there is one small area in which it is essential that military spouses keep their finances at least a little separate: credit and credit cards.
Whether you keep your money entirely divided or mix everything together into joint accounts, it is really important that both partners establish their own credit histories and maintain good credit scores.
Access to credit and positive credit history can make so many aspects of life easier: renting a house, getting insurance, obtaining a new job or setting up utilities. This is true for every couple, but there are some special reasons why it can be even more important for military members and their spouses.
See related: Credit guide for military members and their families
You’ll have a backup plan if your spouse falls victim to fraud
One lost wallet or stolen Social Security number can affect the entire family if all its accounts are joint. With at least one separate credit account, the family can continue to function even if one partner has their accounts compromised and needs to close their credit or debit cards.
It can be hard for a family to function without access to a payment card. Here are some examples that apply specifically to military families:
- A separate credit account will let the military victim of a stolen wallet order a new driver’s license from their home state without having to wait for new credit cards to arrive. When you’re living far away from home, you don’t have the option to go to the driver’s license agency in person.
- Military families often live overseas, and it can be challenging to use U.S. credit cards when you’re living in a foreign country. Having separate credit can help when you’re living abroad and your credit card account is frozen because your bank suspects fraudulent activity.
- Deployments can add complexity to the already difficult task of fighting identity theft. If you’re somewhere with limited communications, it could take months to sort out a stolen Social Security number or other personal information. Life goes on at home, and the stay-at-home spouse may need to travel or do other things that are easier when you can use credit.
You can double your credit card benefits
Many credit cards with amazing travel benefits waive the annual fees for military members, and sometimes also their spouses. Some examples include the Chase Sapphire Reserve and The Platinum Card® from American Express. The Reserve has an annual fee of $550 while the Amex Platinum has an annual fee of $695.
And having separate accounts means you can qualify for twice as many Uber rides, airline credits, hotel upgrades and other perks.
What can this mean for you? I once flew from Washington, D.C., to California and used the American Express Platinum’s $200 airline fee credit to upgrade my boarding on Southwest Airlines. I also used a Priority Pass member lounge for free lunch during my layover.
If your servicemember spouse travels for work, a lounge membership is an amazing benefit for them. Not only is it much more comfortable than sitting in at the gate, but it will also save you money on food and beverages. Some lounges even have showers!
You’ll have a safety net in the event of injury, death or divorce
Military families know it’s important to be prepared for anything, and that includes the possibility that one partner will be injured, become ill or die, or that the couple will separate or divorce. In all these situations, both partners will find life less complicated if they’ve maintained their own credit histories.
It’s sad and frustrating when one partner suddenly needs to function on their own and doesn’t have the credit history to do the things they need to do. Joint and authorized user accounts may help build that history.
However, if you’re an authorized user and the primary account holder dies, you can no longer use the card. If you get divorced, you or your ex-spouse may request that you be removed from the account, and it will no longer factor into your credit history.
On the other hand, individual accounts will be reported to your credit profile for as long as they’re open, and for several years if you decide to close them.
Use your credit wisely
Military spouses are unemployed and underemployed at a much higher rate than their civilian counterparts. However, being unemployed or underemployed won’t affect your ability to apply for credit. Federal law allows applicants over the age of 21 to use income shared from a spouse or partner when applying for credit.
As always, it is important to use credit wisely. Choose the right low-cost card, maintain appropriate credit lines and pay your balance in full each month to get the maximum benefit without paying unnecessary fees and interest.
Maintaining your individual access to credit is an important way to be ready for whatever military life sends your way. Whether it is an unexpected deployment, a few years overseas or simply a regular move, a solid credit history can make all parts of the process easier.