Todd Ossenfort has been chief operating officer for Pioneer Credit Counseling since 1998. He writes our weekly “The Credit Guy” column, answering reader questions about credit counseling and debt issues.
Dear Credit Guy,
I am getting married soon. I have two credit cards and my fiancee has two credit cards. We were thinking about adding each other as authorized users of the other’s cards. Is there any reason we shouldn’t do this? Will it affect our credit? — Scott
Dear Scott,
Congratulations on your upcoming marriage. I am encouraged to see that you and your fiancee have been communicating about your finances. Knowing how each of you has managed your money separately will help you determine the best way to manage it together. And of course, open communication about finances — and other topics — is an important ingredient in a successful marriage. If you need proof, consider that arguments about money are among the top five reasons people divorce.
Your question about your credit card accounts should be contemplated along with other decisions on how you will combine your financial lives. Below is a list of things to consider:
- Bank accounts: Will you have joint checking and savings accounts or will you have separate accounts? Having separate savings accounts for “spending money” is a good compromise for many couples.
- Housing: Will you purchase a home together or will one of you apply for the mortgage alone? Some couples make the decision for one person to hold the mortgage if the other spouse has bad credit.
- Spending plan: Everyone needs a plan for how they will spend their income. Discussing how your combined income will be spent is a great way to learn how each of you prioritizes. Keep in mind there are no right or wrong ways to spend, just different approaches. Be prepared to compromise. Another good idea to keep arguments at a minimum is to agree to consult each other before making purchases of more than a certain amount, such as $100.
- Bill paying: Typically, one partner or the other is more organized, and keeping up with bill paying may be a natural fit for that person. However, the other partner is not off the hook totally — he or she should understand what is being paid and how to make the payments if needed.
- Financial goals: Another important discussion to have to determine if you are on the same page and, if not, how best to compromise. I encourage you to include an emergency savings account of at least six months of living expenses in your planning.
- Credit cards: I recommend keeping at least one credit card in your own name. Adding each other to your accounts as authorized users would allow you use of the other spouse’s accounts. One thing to keep in mind is that any negative activity reported on the account will also be reported on the authorized user’s credit. The other potential effect to your credit is the additional access to the credit line on the cards where you would be an authorized user. Some creditors do not want you to have access to too much credit when considering you for a loan.
- Debt: If one or both of you are bringing debt into the marriage, you will need to decide together how it will be paid. This can become an issue, particularly if one partner has large student loan or credit card debt. If that is the case for you, know that paying the debt will become a joint venture once you are married, and you will both have to make the sacrifices necessary to get it paid.
The bottom line is that you and your fiancee will need to work together and keep the lines of communication open. My last piece of advice is never to keep financial secrets from your spouse. Surveys often reveal that spouses do this and those secrets can be detrimental to your marriage.
Take care of your credit!
See related:Mine, yours and ours: Marriage and your money, How to cope when spouse’s secret debts come to light, 80 percent of spouses lie about spending, How bad credit affects a new marriage, Help for bad credit: Relationships, marriage and divorce, How being an authorized user can hurt your credit score, Act fast to remove authorized user when your credit goes south
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