Coordinating Credit Card Strategies for Couples
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Equitability in relationships is crucial, including financial decisions like which credit cards to apply for, who does the applying, and who reaps the benefits. I asked resident TPG family man Jason Steele to share his strategies for maintaining balance and harmony in a credit sharing couple.
Couples need twice as many points and miles to travel together, but they have twice the opportunity to earn rewards from credit cards. There are several strategies you and your partner can use to leverage your credit (and your relationship).
How credit cards work for married people
As far as credit card issuers are concerned, they don’t care whether or not you’re married. Individual adults can always apply for their own credit card accounts regardless of whether their spouse has the same card. Each individual has his or her own credit score, and will be approved or denied independent of their spouse’s credit score.
At the same time, new rules by the Consumer Financial Protection Bureau assure that non-working spouses can report their working spouse’s income on credit card applications as part of their household income, so long as they have a reasonable expectation of access to their spouse’s income.
Account holders can make their spouse (or anyone else) an authorized cardholder on any account. Authorized cardholders can make charges to the card, but are unable to make changes, redeem rewards, or report cards lost or stolen. (exceptions include banks that allow joint accounts and granting power of attorney, which are rare.) For example, my wife and I could both apply for and receive a particular credit card, and also make each other authorized cardholders, for a total of four credit cards attached to two accounts.
In addition, authorized cardholders are not responsible for repayment; only the primary account holder is. On the other hand, someone with a low credit score can benefit by becoming the authorized cardholder of someone with a high credit score.
Should couples both get the same credit card, or diversify their holdings?
I manage the credit card accounts in our household, so every time I see a great credit card with a generous sign-up bonus, I must decide if it’s worth applying for just once, or in both of our names. To decide whether to apply for a card once or twice, I use the following criteria:
- Do you manage your finances jointly or separately? Couples who manage their finances separately will want to have separate accounts, at least for the cards that they use for everyday spending. My wife and I happen to manage our finances together, which, among other things, gives us more flexibility to choose the right cards for our needs.
- How great is the sign-up bonus? Some offers remain consistent for years on end, while others are limited time offers that could be gone in days. The more exceptional the offer, the more likely we are to both apply for the same card. (See the post Credit Card Sign-up Bonuses: When To Wait for a Bigger Offer)
- Can the cardholder benefits be leveraged across our family? Some cards I apply for not just to earn a sign-up bonus, but to earn rewards for spending and enjoy other cardholder benefits. In those cases it may be unnecessary for us to each have an account. For example, the primary benefit of the Barclaycard Arrival+ is double miles on all purchases, which I can enjoy as an authorized user of my wife’s account. Another example is the Citi AAdvantage Executive card, which we can both use for baggage fee waivers, priority service, and lounge access when we fly together. The same is true for the benefits of hotel credit cards so long as we’re traveling together. On the other hand, the Delta SkyClub lounge benefit offered by the Delta SkyMiles Reserve card can only be used by the primary cardholder. The American Express Platinum card offers equivalent benefits to authorized cardholders, but each additional card has a $175 annual fee.
If only applying for one card, who should apply?
When the signup bonus is nothing special and the benefits of a card can be conferred to both partners, who should be the one to open the new account? First, I look at who is more likely to need the benefits exclusively. For example, I travel without my wife more often than she travels without me, so I tend to open hotel and airline accounts in my name and use those benefits when I travel solo.
Furthermore, we try to balance out our new applications so that neither of us has a greater credit history or is more likely to be declined for a new card due to too many recent applications. Therefore, we’re more likely to open an account in my wife’s name for non-travel cards, and make me an authorized cardholder.
Managing your partner’s account. Since only the primary account holder can make changes to an account, there is sometimes difficulty when attempting to manage my wife’s accounts. My favorite workaround is to use the secure messaging feature for most simple inquiries and requests. On the other hand, my wife calls the bank herself to ask about retention offers for cards in her name.
Keeping things simple. While we can have cards for every possible use, we generally carry one card at home for general spending, and perhaps two other cards that offer bonus rewards for spending in specific categories, such as gas or groceries. Before traveling, we go though our wallets and include the travel related cards we might need for a particular trip.
Organization. Maintaining a spreadsheet with all of your cards, application dates, and other important information is a good idea. Another is to place a small sticker on the back of each card with the name of the primary account holder, since telling them apart can be next to impossible otherwise.
Do you have tips for organizing and maximizing credit card use in your relationship? Please share them in the comments below!