I know, I know, till death do us part. You get married and you figure you will be married forever. You?ve created a partnership that will last forever so why shouldn?t you merge your personal finances with your spouses. At first that may seem like a wonderful idea, but before you go ahead and do that there are several very important things to take into consideration.
Understand that if you both sign a credit card application for the same account you are both 100% liable for any transactions that occur on that account. Meaning, that if the account has a $25,000 credit limit for example, and one spouse goes out and uses that credit card to buy a vehicle for $20,000 you are jointly responsible to repay that $20,000 whether you agreed on the purchase of that vehicle or not. Does that sounds like a farfetched example? Perhaps, but it happens all the time.
And you know what happens next? If your spouse does that with a joint credit card and he or she doesn?t pay the bill, you will have to ensure that the bill gets paid on time, or your individual credit score will drop, and so will your spouses.
As well, even though there is no such thing as a joint credit history, if you and your spouse both neglect your joint credit card account your individual credits scores will both be ruined. So if you enter into the marriage with an excellent credit score that you have worked so hard to maintain, and then you and your spouse sign up for joint credit cards you are taking a big risk.
A
t first things may work out fine. You?re in the honeymoon stage after all. But what if the above scenario occurs, or something similar? What if your spouse rings up a ton of debt and leaves town and you are liable to pay it back, but you can?t afford to?
Each time you miss a payment it will be reported against each of your individual credit scores. And eventually the score you worked so hard to achieve will drop. Even worse, you may be forced to declare bankruptcy if you can?t pay up and your spouse is nowhere to be found.
Even though you are married and you want to share everything, having separate credit card accounts will protect you now and in the future. If you avoid having joint credit card accounts and one day you do decide to get divorced, you will only be liable for any debt that you carry on your cards. And your angry spouse will not be able to run out and charge a bunch of purchases on your card ten minutes after you ask for a divorce.
And most importantly if you avoid having joint credit card accounts and one day your spouse dies you will not be liable for any of their credit card debt. Their debt will be paid by their estate. And if their estate does not have sufficient assets to cover the debt, then the outstanding debt is ?written off? by the creditors.
Having separate credit cards does not mean that you can?t or shouldn?t plan your financial future together or set financial goals together. Of course you can, and you should. And as you plan your future be very clear with one another about how much you are spending, whether you use your credit card or cash. Make sure that your budget allows for that expenditure and that the purchases that you make will not jeopardize your finances individually or as a couple.
