While some couples opt to keep things separate, sharing a credit card can help when it comes to streamlining household money management. But it isn’t always easy. Whether you add someone to your credit card as an authorized user or open a joint account, problems can pop up if you’re not careful. Here are three common ones to look out for:
Maxing out your credit limit. You’ve just doubled the chance of reaching your credit limit by adding another person to the account. Even if you don’t come close to maxing a card out, a spouse’s spending could hurt your credit score. Remember that using more than 30 percent of your available credit limit can lower your credit score.
To combat this problem, set up alerts to know when your credit balance reaches a certain limit, and have regular discussions with your spouse about upcoming expenses. Pay the credit card bill in full each month and, if you can, pay the bill more than once per billing cycle to keep your credit utilization rate low. Doing so should improve your credit score.
Not assigning responsibility for paying the bill. Late fees can add up if one of you forgets to pay the credit card bill one month—or two.
Determine who is responsible for paying the bill every month, and don’t rotate this duty. While one of you should be responsible for paying the bill, both of you should know how to log in to the account online and pay the bill if it becomes necessary at some point down the road.
In addition to email alerts letting you know when a bill is due, automatic credit card payments can be set up, although you want to make sure your bank account has enough cash to cover payments when due dates roll around.
Using rewards. There are plenty of things to decide together as a couple, and how you as a couple use your credit card rewards can cause some friction.
Points can be redeemed often or saved up, and while you may want to spend them on airline tickets, your spouse may find it more beneficial to use them at a hotel. Or, you may want to redeem your rewards for cash, while your better half wants to spend them on gifts.
If you can’t agree on how to redeem rewards, find a card with a lot of options such as travel, cash back and gift cards.
You can also choose different cards for different expenses. For example, you could find the best travel rewards card and only use it to pay for travel, while finding another card for everyday expenses. Redeeming the points for cash back can help offset some of your daily expenses.