Joint Credit Card: 3 Perks
Applying or co-signing for a credit card with your loved one has its risks. The credit card and its activity appear on both of your credit reports, and you’re both responsible for the balance. If your loved one has good financial habits, however, a joint credit card account comes with a lot of perks.
From helping you combine your finances to building credit and racking up rewards, a joint credit card is a great financial tool for couples. Here are three reasons why you should open one.
Earn Rewards Faster
A credit card rewards program offers one of the fastest and simplest ways to earn freebies. If your card features this perk, you can earn points or cash back on every purchase. After you accumulate enough points, you can redeem them for merchandise, travel, statement credits or cash. But even if you’re earning 1 point or 1 percent cash back on every dollar you spend, it takes time to accumulate rewards. A joint credit card, on the other hand, helps you rack up more points.
Since you and your loved one will have access to the same credit line, you will have more opportunities to earn points. In this way, a joint credit card can be an excellent tool if you and your partner are planning a vacation and want to accumulate as many points as possible to redeem for free airline tickets, hotel stays and more.
Boost Credit Scores
A joint credit card appears on both of your credit reports and affects both of your credit scores. This can be a good or bad thing depending on how the two of you manage the account. It might be your partner’s responsibility to send payments each month. Just know that if he consistently makes late payments, your credit report will reflect this.
On the other hand, if you both manage the credit card responsibly by paying the bill on time and only charge what you can afford, both of your credit scores will benefit. A higher credit score means you’ll be able to qualify for lower rates when applying for financing in the future.
Get Lower Rates
One in three U.S. adults say their households carry credit card debt from one month to the next, according to a 2015 survey prepared for the National Foundation for Credit Counseling. If you don’t pay off your credit cards every month, it’s important to find a card with the lowest rate possible. This reduces interest charges, allowing you to pay off balances faster.
Unfortunately, if you have less-than-perfect credit and apply for a credit card alone, you’re not likely to get a low-rate card. The higher your rate, the more you’ll pay in the long run. If you apply for a joint credit card with your partner, however, and they have excellent credit, you might qualify for a card with a lower rate and higher credit limit.
Your credit card company will evaluate both of your credit scores when determining whether to approve your joint credit card application. In some cases, one applicant’s good credit history can compensate for the other applicant’s fair or bad credit history.