4 card-shopping tips for newlyweds
By Allie Johnson
April 22, 2015
At your wedding, you may have received piles of presents, from china to bedding to monogrammed towels. But there’s one thing you probably didn’t get: a shiny new credit card.
Now that the honeymoon is over, the two of you should evaluate your card needs as a couple, says Tiffany Funk, who helps consumers figure out and redeem rewards at PointsPros.com.
First, it’s important to talk about your philosophies regarding plastic. Do you pay in full each month, while your honey tends to carry a huge balance? Does one of you play the “miles game,” maximizing travel miles on an existing card? Discuss which cards you have and how you use them.
Then, talk about your life and money goals and how you might use credit to help achieve them, she says. For example, a balance transfer card can help you pay down high-interest debt, a low-interest card could help finance a range for your dream kitchen or a rewards card might provide free trips.
“Having the right card really makes a difference,” Funk says.
Embrace the cards you have
As a newlywed, you might wonder if you and your spouse should cancel your old cards and open new ones together. Don’t do it, says Daniel Sater, a credit expert from CreditScoringAdvisor.com.
Keeping your cards open helps your credit score in several ways. First, length of credit history counts for 15 percent of your FICO score, and older accounts boost your score, Sater says. Second, having more available credit also helps your score, he says, by lowering your credit utilization ratio.
It’s fine to add your new husband or wife as an authorized user on your current card, though, Sater says.
“Having the right card really makes a difference.”
— Tiffany Funk, PointsPros.com
One word of caution: Don’t add your spouse to a card on which you’re carrying a big balance, says Kimberly Howard, a certified financial planner and owner of KJH Financial Services. The debt can affect her debt-to-available-credit ratio and hurt her score, she said. For example, if the card that your wife is on as an authorized user has $2,000 in debt, and the available credit on that card plus her personal card comes to $4,000, the ratio is 50 percent, which is much higher than experts recommend. Ideally, you should both have a ratio well under 30 percent and preferably at 0 percent.
If you do add your spouse as an authorized user, you’re still solely responsible for paying the bill. So, make sure you agree on how the cards will be used, Sater says.
Shop for a card as a couple
In addition to the cards you have, do you want new plastic for your life together? Here are four tips for newlyweds shopping for a card:
1. Consider why you need a card. Look at your goals and how a card could help achieve them. For example:
- Do you aim to pay down debt? Maybe one or both of you racked up card debt paying for the wedding dress, flowers or bar tab for 200 guests. If your goal is to pay off wedding debt quickly, consider a balance transfer card with a 0 percent introductory APR, Funk says. Make sure you can pay the balance in full during the introductory period and read the terms carefully, especially the post-introductory APR, she says.
- Do you want a richer lifestyle? Do you dream of racking up miles for a romantic trip to Paris or accruing cash back to save for a down payment on a house? If you want to leverage your regular monthly spending to earn perks, a rewards card might be for you, Funk says. Just make sure to pay the bill in full each month, Howard says. Rewards cards tend to have relatively high interest, so you don’t want to carry a balance.
- Do you plan to finance a purchase? If you want a card just in case your dishwasher goes kaput and you can’t afford to pay for a new one at once, a low-interest card might be best, Howard says. However, plan to pay off the purchase within a few months to minimize interest charges, she says.
If you think you’ll use cards for more than one purpose, there’s nothing wrong with getting two types of cards, Howard says.
2. Look at your lifestyle. If you plan to get a rewards card, look at your lifestyle and shopping habits, Funk says. For example, if you eat out at restaurants all the time and your spouse travels for work, you might want a card that gives double points for dining and travel, she says.
3. Read the fine print. Before you choose a card, read the terms and conditions to understand how the card and rewards program work, Funk says. For example, can you transfer points or miles to your spouse? Most cards allow you to do so, but double check, Funk says. Also, how can you redeem your rewards? For example, if you want to use your cash back to save for the down payment on a house, make sure you can get your money by check or direct deposit to your bank account rather than just a statement credit, she says.
4. Apply the right way. As much as you love togetherness, don’t apply for a joint card, because both accountholders are responsible for debt the other racks up, Sater says. Generally, the spouse with better credit should apply for the new card because you’ll get a better interest rate and higher credit limit, Howard says, adding that you can then add the other spouse as an authorized user. If both of you have good credit, and you’re looking at a card that offers a certain number of points as a sign-on bonus, each of you can apply for a card to double your bonus, Funk says.
In general, as you go through life together, you and your spouse should have regular conversations about money and credit, Funk says. “It’s a really important part of a healthy marriage,'” she says.