Is It Wise to Apply for a Credit Card With Another Person?May 29, 2011 - 8:57 am
With the exception of your legal spouse, applying for a credit card with someone else may be too big of a financial risk to take. Unfortunately, joint accounts held between parties that are not legally married often end in dispute once the couple go their separate ways. It is for this reason that it makes sense to keep finances separate or face the credit consequences down the road.
Basics of a Joint Credit Card Account
When you apply for a credit card with another person as a co-signer, joint account holder, or as an authorized user both parties become equally responsible for the financial obligation. While both parties on the account may be legally responsible for paying the bill, it does not necessarily mean the bill will get paid. Late or missing payments can dramatically affect the financial history and credit score of each party involved.
Once an account goes overdue, both parties may end up with black marks on their report and a drop in their score. The black marks will go a long way as negative information stays on a consumer credit history report for 7 years. Low scores and bad records will impact your eligibility for credit in the future.
Sharing a joint credit card account can ultimately affect your financial future for many years to come. Lowered credit scores may mean you have to pay more money for services like car insurance, home insurance, and utilities. It may also be harder for you to get a job because many employers will rely on credit checks to make personnel decisions.
Financial Separation Makes Sense
Mixing money and relationships is historically not a good idea. Relationships often turn tumultuous when money is involved and even the closest friends and family can be torn apart over loans and credit.
When you are involved in a relationship with someone other than a spouse, it is financially smart to keep finances and accounts separate because there is no protection in the event you split up. What often does happen in unhappy relationships where money is concerned is vindictive behavior that leads to unpaid bills and bad credit marks.
Instead of becoming entangled in financial drama, it is best to maintain separate accounts until after marriage. Joint accounts will affect both parties positively when things are well and negatively when things go bad. By keeping accounts all your own, you have control over your own credit profile instead of risking damage caused by someone else.
Credit Card Debts Long-Lasting
It is not uncommon for separated couples to cause problems after a break up, especially where finances are concerned. There are many civil court proceedings that involve former couples facing debts from maxed out credit cards where balances were intentionally racked up to hurt the other person. Regardless of who does the charging, the credit card debts and consequences will continue to affect both individuals.
Credit card debts are not just made up of purchases. Failing to maintain prompt payment schedules results in late fees, penalties, and increased interest charges – all of which can add up to significant amounts of debt. Credit card debt also does not go away if ignored. It will only continue to get bigger and more complicated the longer the situation drags on.