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Expert Q&A: The Pros and Cons of Joint Accounts

June 27, 2011
Ask Erica
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QDear Erica,
I just learned I am an authorized signer on my spouse’s credit card account (and am a joint owner on all of our other cards). We could leave it this way, or we could add me as a joint owner. Assuming a noncontentious and ongoing relationship, and a history of always paying in full, is there an advantage or disadvantage to our individual credit reports or credit scores? Tucker

ADear Tucker,
I see no immediate reason that you should abandon your authorized user status and take on another jointly held credit card. It looks like the two of you are pretty well merged as it is. But, to be sure, let’s go over what being an authorized user — as opposed to a co-signer — really means.

As an authorized user, you’re an honored guest on a credit account and have the same charging rights as the person who owns the card. The credit activity of the primary cardholder (your wife) will appear on the authorized user’s (your) credit report, and vice versa. What you don’t have is joint payment responsibility, as you would with a co-signed account. Because the credit card company looked at only your wife’s credit and personal information to determine qualification and to set terms, she’s the liable party if anything goes wrong. Ask Erica

Consequently, the major advantage for you as an authorized user is legal protection. If your wife doesn’t pay the account as agreed and it goes delinquent, in most circumstances, the creditor can only sue her for the debt, but not you.

And the disadvantage? Well, as a spouse, you still have to deal with her financial indiscretions even if you don’t technically have to pay. Her debt is your debt if you have a “we’re in this together” attitude. Also, any missed payments or high balances will affect your credit reports and scores.

I know that a lot of couples are perfectly fine having mixed bank and credit accounts. They communicate well and often, are financially responsible and take steps to swiftly resolve any and all problems. In such relationships, sharing all types of cards and bank accounts can work out smashingly.

However, not all couples are like this. When one person keeps secrets, makes unaffordable charges or fails to pay on time, it can cause a huge amount of strife.

Whatever kind of couple you are, I suggest the following ways to deal with both merged and separate credit accounts:

1. Determine who pays what bills. It doesn’t have to be the primary account holder, but it should be the person who has the best aptitude and time for money and credit management.
2. Make a transparency commitment. Both parties should be pretty open about charging and not be afraid to reveal their credit activity when asked.
3. Stay involved. Even if you aren’t the designated account manager, review monthly statements together at least a few times a year. It’s never a good idea to be too removed from your personal finances.
4. Set reasonable charging expectations, such as checking with the other person before buying something over $200. You don’t want to make a big purchase when your spouse just did, pushing you up or over the credit limit.
5. Don’t be too controlling. Everyone wants some level of autonomy. Respect each other’s right to charge freely, as long as it doesn’t negatively impact the other person.
6. Pull your credit reports once a year and review them as a couple. Check to see how the authorized user and co-signed accounts are being reported, as well as the balances and payment patterns for any individually-held accounts.

As for that authorized user card, unless you can see a reason for hopping off her account, I say stick with it and enjoy the ride.




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