The perils of sharing a credit card
Connie Prater: CreditCards.com recently published our annual Taking Charge Survey, which is an annual snapshot of how Americans feel about credit cards, how they use them, and how they manage their debt.
The survey revealed some interesting information about how Americans use their credit cards and in terms of sharing accounts. What we found was, that about half of Americans have shared an account at some point, at that means either a joint account with a spouse or a husband, or through having authorized users, such as children, use their credit cards.
While on the face of it, it might seem like a good idea to share a credit card, especially if you’re a husband and a wife and you have joint checking accounts, but what we found was that it can get you into a lot of trouble, particularly for instance, you may be happily wedded and blissfully in love right now, but 6 years from now or 5 years from now, your relationship might fall apart. And this goes for dating couples as well, boyfriend and girlfriend who have a joint account. That relationship may sour, and you have a financial relationship at stake.
Sharing a credit card can actually hurt your credit score. And that happens, that can happen, if the other person has acted irresponsibly, and went to the mall, charged up a storm on your credit card. And suddenly you have a large bill to pay that you’re unable to pay. If you don’t pay that bill, it can hurt your credit score in terms of negative remarks by your credit card company, so it is a good idea that if you’re sharing an account with someone, know that person very well, and know they’re going to act responsibly with it. In fact, many credit counselors say don’t even bother sharing an account because it’s just not worth it. These days your good name and your credit history are just that important.
Well with authorized user accounts; that’s when a son or daughter who’s going off to college is authorized to use a credit card that is actually in your name and they’re a user on the account, those can be pretty tricky as well. And here’s the situation: your son goes off to college and decides that he wants to go shopping at the mall or that he wants to order pizza for the entire dorm. You have probably given him very specific instructions about not overspending on that card, unfortunately we know that teenagers and college-age kids don’t always do what their parents want them to do, and suddenly you’re hit with a very large bill that you are responsible for paying for. So number one is, is that child or person who’s the authorized user a responsible person, or are they going to charge up your card?
You know, a lot of credit counselors and financial advisors are now saying that it’s probably never a good idea to share that credit card, even with a husband and wife situation, because you just never know. Fifty percent of marriages end in divorce, and, five or six years from now, you could be arguing over that joint account, so it’s best to just have credit separately, in your separate names.
I’m Connie Prater, Senior Writer at CreditCards.com
Connie Prater, senior writer at CreditCards.com, talks about the results of the 2008 Taking Charge survey, focusing on sharing credit cards.