Joint Credit Card vs. Authorized User

Two people can opt to share one credit card, a situation that has both benefits and drawbacks. Most people are aware of this. What you may not know is that there are two different ways to share cards: getting a true joint credit card and allowing an authorized user on to an individual credit card. These approaches to sharing credit are very different and you may certainly find that one makes more sense for you than the other. You may also find that it makes more sense to keep your credit cards separate.

The Joint Credit Card

A joint credit card is a credit card that two people apply for and get together. Usually this is done by married couples who already share checking accounts and other finances. The joint credit card is a card that both people are equal members of. You are both responsible for the full amount of debt on the card, you can both use the card without the other person’s permission and the information about the card goes on both of your credit reports. There are several benefits to getting a joint credit card with someone you trust. However, it can also be risky.

Benefits of the joint credit card include:

• All monthly purchases are consolidated into one payment. Couples can buy groceries, go on dates and enjoy other shared expenses without splitting the cost every single time. Couples who do split the bill can do so one time at the end of the month when the credit card bill arrives.
• There is some small potential for feeling closer to your partner. Being able to share the responsibility for a credit card with another person (and to see all that they choose to purchase on the credit card) makes some couples feel closer to one another.
• The individual with better credit can assist the one with worse credit. Proper use of the card by one or both parties will reflect positively on the credit reports of both individuals.

Risks of the joint credit card include:

• Negative use of the card by one partner affects the credit of both partners. This has long-term financial ramifications. It can also cause a lot of conflict in your relationship.
• Differences in spending habits are magnified. You and your partner may feel differently about how much should be spent on what types of things. Having to share a credit card can exacerbate the problems related to that. Of course, it can be a good thing to work through those differences together but it can also be very tough.
• The debt remains even if the relationship doesn’t. The debt left on a joint credit card will be added to the long list of things to be settled during a separation if things should come to that.

The Authorized User

Another option for adding a second person to your credit card is to go the route of allowing an authorized user on to the account. This allows a second person to use your credit card but they are not responsible for the payments and the information does not go on their credit report. It is more common for parents to do this with teens than for couples to do this and of course it has its pros and cons.

Benefits of allowing an authorized user on your credit card include:

• Rewards cards points add up more quickly. The use of the card by either party will add to your rewards points on rewards credit cards.
• It allows someone with bad credit or no credit to learn responsible use of credit cards. The great thing about having someone on your account as just an authorized user is that you can set up a different credit limit for them than the one for yourself. Parents often do this for teens so they can learn to use a credit card without going crazy over it.

Risks of having an authorized user on your credit card include:

• Another person may be less protective of your identity. The other party may not take the same precautions that you do to protect you from identity theft when using the card.
• Ultimately only the cardholder is legally responsible for the debt. If the authorized user on your account runs up debt then you will have to pay it off. Although you may be able to take the person to small claims court to recoup your losses, you are the one that needs to make the payment.

Should You Share Credit Cards?

It is important to think carefully about whether or not you want to have a joint credit card with someone or to authorize them to use your account. Negotiation over the use of the account and/or improper use of the account may jeopardize your relationship so weigh the benefits and drawbacks realistically before making the call.