Saying "I do" to joint credit cards
Canadians are marriage-friendly folks. In fact, about 48.5 percent of Canadian adults tied the knot in 2006. Better yet, when it comes to divorce rates, the nation ranks 8th (2.46 divorces per 1,000), trailing behind the United States, Puerto Rico, Russia, the United Kingdom and Australia, according to Statistics Canada.
Of course, where there are happily married couples, there are likely to be joint credit cards. But while you may be eager to apply for a marriage licence, there are some important advantages -- and disadvantages -- worth considering before you merge plastic.
The advantages include: "One of the biggest pros is that a joint credit card keeps everybody honest because you can't hide your spending from your spouse or partner," says Chad Viminitz, a financial behaviour coach with RTR Advisory in Edmonton and author of "Money Assassins: How They Stole Your Financial Freedom and How You Can Get It Back."
Forget about concealing that designer handbag or new set of golf clubs. Sharing a credit card means sharing a credit card statement -- cold, hard evidence of your loved one's spending habits.
In addition to greater accountability, joint credit may also help enhance a poor-credit partner's credit rating. Becoming a joint account holder of a credit card belonging to a good-credit spouse can help improve the poorer-credit partner.
However, there are disadvantages to a joint credit card, especially in the event of marital discord. "I've seen nightmare cases where one party starts racking up the credit card bill because both people are on the hook for it," warns Viminitz. "That's definitely a big drawback. If you're in a shaky relationship, I would strongly advise against getting a joint credit card."
Scarier still is the fact that you'll be responsible for your partner's credit card purchases if he or she can't afford to make payments. "On a joint account, a credit card company will go after deep pockets," says Viminitz. That's especially dangerous if your partner develops some bad spending habits such as a gambling addition or shopping obsession.
Whether you're in a state of marital bliss or on the verge of a breakup, Viminitz says the key to owning a joint credit card is diligence. "You want to be going through your credit card statement regularly to make sure that the spending is in alignment with what you're earning," he says. And that's a rule that applies in both financial sickness and in financial health.
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