Once you move in with a partner or get married, it may be a good idea to get a shared credit card. Charging household expenses on one card and paying the bill from one bank account can make managing your household’s money easier – until one of you makes a credit card mistake , that is to say.
Unfortunately, even a single misstep can negatively affect the credit scores of each of you. The moment you add someone as Authorized user your card or open a joint account, you are no longer totally in control of the use of this card. It is therefore very important for couples to keep an eye on their credit card spending, bill payments, and reward balances.
Here are some errors and communication problems that can occur, and how to avoid them.
Your combined expenses eat away at your credit limit
Two people debiting the same credit card account at the same time means it’s much easier to max this credit card, or even just using more available credit than you want – and that’s not good because it can lower your credit scores. Keep your credit healthy by using no more than 30% of your available credit limit.
Even if you aren’t mindlessly spending, it can be easy to rack up a big monthly bill. And if you don’t have the cash on hand to pay that bill in full each month, it can trigger a cycle of credit card debt that can be hard to break.
Configure alerts to let you know when your credit card balance reaches a certain point, or when one of you is spending a large amount.
Talk regularly about upcoming expenses and agree to check with each other before spending more than a certain amount.
You forget whose turn it was to foot the bill
You thought your partner was taking care of the pesky task of paying the credit card bill this month … until you got hit with late fees. It turns out they thought you were going to take care of it.
Slippages do happen, but these kinds of misunderstandings can lead to later late fees, penalty APRs, or potential impacts on your credit scores.
Call your credit card issuer and ask if you can get late fee waiver. If you are a long-time reliable customer, you may be in luck. Many cards offer first overdue relief as a feature. You can also look for a card that never charges late fees, like the Citi Simplicity® Card – No late fees.
Assign responsibility for paying the bill to one of you instead of rotating every month, although you both need to know how to access your online account and pay the bills just in case.
Configure an alert to send you an SMS or an e-mail a few days before the invoice is due.
You don’t agree on how to use your credit card rewards
You want cash back, but your partner wants miles. Or your partner wants to redeem points frequently, while you want to save them to pay for something expensive. What do you do when you disagree about your credit card rewards?
Before either of you asks for or redeems anything, have a conversation. What good is a card with rewards in both of your minds? When you set goals that you can agree on, like saving for travel, collecting points to buy holiday gifts, or using cash back to offset expenses, you can approach team-based reward redemption.
Choose a card with many redemption options, like cash back, travel and gift cards. This will give you some flexibility.
Choose different cards for different expenses. For example, the American Express Blue Cash Preferred® Card earns 6% cash back in US supermarkets up to $ 6,000 in spending per year (then 1%). Conditions apply (see rates and fees). Use this in tandem with a more travel-focused rewards card like the Chase Sapphire Preferred® Card, which earns 2 points on all travel and catering purchases and 1 point on everything else. This way you can save on daily expenses and start building a travel fund simultaneously.
What if you don’t agree? So maybe that means separate cards for the two of you, if you both can keep track.
Harmony at home might be worth it.
To consult the rates and costs of the American Express Blue Cash Preferred® Card, see this page.