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Shared accounts for couples: good or bad idea?

Eva Norlyk Smith Ph.D.

August 25, 2014

QDear Eva,

My husband and I have a shared bank account, but not individual accounts. Is that a bad thing? I've read that you should have separate accounts, but I don't really understand why. What's the thinking behind shared or individual accounts? Or both? –Kathy

AHi Kathy,

There's nothing wrong with having a shared bank account, as long as you guys have an easy time agreeing on how to spend your money. If not, some couples find it simpler to set up some overall spending goal in different areas and create separate accounts that each person can draw on, as long as he or she stays within those spending goals. But other than practicalities like that, there is no particular disadvantage to having shared bank accounts.Ask Eva

It is different when it comes to credit accounts, which may be what you have read about. The reason is that if you don't have any credit accounts in your name, such as credit cards or even a car loan or mortgage, you won't develop a credit history of your own.

Some newly divorced or widowed women discover this the hard way. If all financial accounts were in their husband's name, the wives never established an independent credit record. And without a credit history, it is very hard to get access to any type of credit. As a consequence, many women who suddenly find themselves on their own are unable to qualify for the kinds of things you need when you set up your own independent finances, such as credit cards, or even car loan or a mortgage.

In this day and age, it's hard to get by without access to credit. Having a credit card is essential to get access to simple services such as renting a car, shopping online or booking an air ticket.

If your name is on a joint credit card, or if you're an authorized user on a credit card in your husband's name, it's good news; you already have some credit history. But it's still a good idea to apply for a credit card of your own, and start developing your own credit record. Here are a few steps to follow:

1.Order a copy of your credit score. Your current credit score will give you a sense of whether you're starting to build credit from scratch, or if you already have established credit in your name. There is a small fee to obtain your score, but it is well worth it. The easiest place to pull your credit score is at MyFico.com. While there are many types of credit scoring models, FICO scores are most widely used by lenders. You can get one from each of the major credit bureaus for about $20 each. (The credit bureaus are Experian, Equifax and TransUnion.) You should also pull your credit reports at AnnualCreditReport.com for free once a year from each of the big three credit bureaus. This will show you what lenders see when you apply for credit.

2. Apply for a credit card. Read up on credit scores to understand the range in which your score falls. Based on that, you can apply for a credit card, but make sure you apply for one that fits your credit profile. If you have good or excellent credit, you will have a much wider selection of credit cards to choose from. But even if you have no credit history, there are still choices. Just go online and search for cards for people with limited or no credit history. Be wary, however, of high-fee cards in this category..

In the credit card application, you will be asked for your annual income. If you don't have an income of your own, it is OK to list your annual household income here, or the money that your husband earns each year as well as any other household income you may have.

3. When your credit is poor. If your credit score is low, consider starting with a secured credit card. With this type of card, you make a deposit that serves as collateral for any charges you make on the card, and the available line of credit is usually equal to the amount of the security deposit after any fees.  There are some bad apples in the barrel when it comes to secured credit cards, so look for cards issued by a national bank. Heads up: Don't apply for multiple cards in quick succession. This alerts lenders that you may be desperate for credit and, therefore, a risk.

If you prefer to not apply for credit cards online, turn to your local bank. Someone who knows you personally and is familiar with your family finances is often able to make better recommendations for you, and may get you a better credit card option than you can get online.

It's important to realize that even though you and your husband may be used to doing things one way, you never know what could happen. It's good basic practice to plan for financial independence, so that no matter what life brings, you'll be prepared.

Got a question for Eva? Send her an email.