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If two people want to use the same credit card, they can do so by opening a joint account or an authorized user arrangement.
Who is legally obligated to pay the bill is the primary distinction between a joint account and an authorized user arrangement. When two people set up a joint account, they can both make purchases and are solely accountable for the bill; however, when only one person is legally liable for payment, only one person can make purchases.
Sharing finances with your spouse is a natural part of building a life together. But when it comes to credit cards, there are two main options: adding your spouse as an authorized user or becoming joint cardholders. Both options offer benefits and drawbacks, so it’s important to understand the differences before making a decision.
Authorized User vs. Joint Cardholder: What’s the Difference?
Authorized User: An authorized user is someone who can use your credit card to make purchases but they are not financially responsible for the debt. The primary cardholder is ultimately responsible for all charges made on the account.
Joint Cardholder: A joint cardholder has equal access to the credit card and is equally responsible for the debt. Both cardholders’ names appear on the account, and both have the ability to make charges and payments
Benefits of Adding Your Spouse as an Authorized User
- Build Credit: If your spouse has limited credit history, adding them as an authorized user to your credit card can help them build credit. As long as you make your payments on time and keep your credit utilization low, your spouse’s credit score will benefit.
- Earn Rewards: Your spouse can earn rewards on their purchases, even if they don’t have their own credit card. This can be a great way to boost your rewards earnings and reach your financial goals faster.
- Convenience: Sharing a credit card can be a convenient way to manage your household expenses. You can track all of your spending in one place and avoid the hassle of carrying multiple cards.
Drawbacks of Adding Your Spouse as an Authorized User
- Financial Responsibility: As the primary cardholder, you are ultimately responsible for all charges made on the account, even if your spouse is the one who made the purchase. This means that you could be held liable for any debt that your spouse incurs.
- Limited Control: You may have limited control over how your spouse uses the credit card. If your spouse is not responsible with their spending, it could negatively impact your credit score.
- Potential for Fraud: If your spouse loses their credit card or has their identity stolen, you could be held liable for any fraudulent charges.
Benefits of Becoming Joint Cardholders
- Shared Responsibility: Both cardholders are equally responsible for the debt, which can provide peace of mind. If one cardholder is unable to make payments, the other cardholder is obligated to cover the debt.
- Equal Access: Both cardholders have equal access to the credit card and can make charges and payments as needed. This can be helpful if one cardholder is more responsible with their spending than the other.
- Improved Credit Scores: If both cardholders have good credit history, becoming joint cardholders can help improve both of your credit scores.
Drawbacks of Becoming Joint Cardholders
- Both Credit Scores are Impacted: If one cardholder has bad credit, it can negatively impact the other cardholder’s credit score.
- Shared Liability: Both cardholders are equally liable for the debt, even if one cardholder is not using the card. This can lead to financial problems if one cardholder is irresponsible with their spending.
- Potential for Disagreements: If the cardholders have different spending habits, it can lead to disagreements about how the card is used.
Which Option is Right for You?
The best option for you and your spouse depends on your individual circumstances. If you are confident that your spouse will use the credit card responsibly, then adding them as an authorized user can be a good way to help them build credit and earn rewards. However, if you are concerned about your spouse’s spending habits or want to share equal responsibility for the debt then becoming joint cardholders may be a better option.
Additional Considerations
- Credit Card Agreement: Before adding your spouse as an authorized user or becoming joint cardholders, be sure to read the credit card agreement carefully. The agreement will outline the terms and conditions of the account, including the responsibilities of each cardholder.
- Credit Score Impact: Adding your spouse as an authorized user or becoming joint cardholders can impact your credit score. Be sure to check your credit score before and after making any changes to your credit card accounts.
- Communication: It is important to communicate with your spouse about your expectations for using the credit card. Discuss your spending habits, how you will manage the debt, and what to do in case of an emergency.
Sharing a credit card with your spouse can be a great way to build credit, earn rewards, and manage your household expenses. However, it is important to choose the option that is right for you and your spouse and to communicate openly about your expectations. By following the tips in this guide, you can make an informed decision about whether to add your spouse as an authorized user or become joint cardholders.
Authorized users
An authorized user on your credit card is someone who has the authority to make purchases using your account. Usually, you can add authorized users by contacting your issuer’s customer service line or through the online portal for your accounts. Usually, authorized users receive a card bearing their name, and the purchases they make appear on your statement.
A couple of things to keep in mind when adding an authorized user to your account:
Joint cardholders
When you have a joint credit card account with someone else, youre both equally responsible for the account. This could be a smart course of action if you and your spouse want to handle your finances together.
To establish a joint account, you will typically need to apply for a new credit card jointly; you cannot add a joint account holder later.
Here are some things to consider before opening a joint account:
Can adding Authorized Users to my credit card hurt my credit score?
FAQ
Does adding a spouse to a credit card help their credit?
Does adding someone as an authorized user affect their credit?
Can a married couple share a credit card account?
What is the difference between joint credit card and authorized user?
Can I add my spouse to my credit card account?
It’s important to note that even if you combine your other finances, both you and your spouse will continue to have separate credit reports and credit scores. If you have good credit but your spouse does not, you could add them as an authorized user to one of your credit card accounts.
Can a spouse use a credit card?
Your spouse also has authority to use the card as if it were his or her own — but doesn’t not have the legal responsibility to repay any balances charged. What are the benefits of adding your spouse as an authorized user? Adding your spouse as an authorized user to your cards can be convenient.
Does a spouse’s credit card affect my credit?
Credit cards in the name of one spouse will not directly affect the credit of the other spouse. If you add your spouse as an authorized user to a credit card in your name, it won’t affect your credit directly. However, how your spouse chooses to use their card can possibly impact your credit.
How can a spouse help build credit?
Here are three ways to help build credit. 1. Make your spouse an authorized user on your credit card By someone as an authorized user on your credit card account adds your credit history to their credit report. The effect is most powerful when you add someone to an account with a great record of on-time payments.