Sharing finances is essential when building a strong relationship with a spouse or long-term partner. We wouldn’t have it any other way. There is much more benefit to managing your finances together as a couple than trying to have separate bank accounts with his and her money. 
The best way to manage your money together is to get on a plan that gets you out of debt quickly and on a path to investing so that you can build extraordinary wealth. However, a good portion of society does not believe in living a debt free existence. So their method of payment for most things ends up being credit cards.
If you choose to go this route, there are things for newlywed couples or committed spouses to consider when merging their finances. You will need to learn how to communicate as you learn to share a credit card and pay bills for the first time together.
Tips to Managing a Joint Credit Card
It’s critical to get on the same page and agree on your strategy. Managing expectations when sharing a credit card will go a long way in having a positive shared experience. So with that in mind, here are five tips for managing a joint credit card with your new spouse.
1. Select a Card That’s Best for Your Joint Needs
Every time you get online, you’ll probably see ads for multiple different credit cards pop up. It’s easy to submit an online application to start your shared credit card journey. But before filling out any application, have an open conversation with your spouse about what you both want from a joint credit card.
Maybe you want travel rewards or benefits like TSA PreCheck. Or maybe cashback on your purchases is more of a priority. Whatever you’re looking for, think about what goals you and your spouse have for a shared credit card. Then, research the benefits and check out the fine print to determine the best option for you.
Being open and honest about your finances and financial goals as a couple can help you both find common ground when deciding on the best course of action for your future together.
2. Set a Spending Limit
Now that you’ve covered what you’re looking for in a shared credit card, it’s time to discuss the parameters of spending on the card. This is a very personal choice, since the amount you can spend depends on your needs and goals as a couple.
For example, perhaps you decide to open a new credit card for travel rewards. Since you love to travel, you both decide that you want to earn maximum points on the card to redeem for a couple’s vacation overseas. On the joint credit card, you can put all your primary and personal expenses, such as groceries, utilities, and personal care.
If you want to keep it simple, you might prefer only to put shared expenses such as rent or mortgage, dates, and shared household expenses on the joint card.
Decide on your monthly budget and how credit card spending fits into that. Once you define your budget, you can set a spending limit that you both agree upon.
You and your partner talk about your financial limits, agree on usage and limits, and stick to the limits you both set.
Related Content: The Ultimate Guide on How to Make the Best Monthly Budget
3. Agree on Your Credit Utilization Ratio
While setting spending limits, check that your credit utilization ratio is on track. The credit utilization ratio refers to how much credit you’ve used (how much you owe on the card) versus your total credit.
Here’s how to calculate your credit utilization ratio: divide your credit card balance by your credit limit. For instance, if your shared credit card limit is $7800 and you owe a $2,300 balance, your credit utilization score comes to around 29%.
Your FICO credit score is based on all your credit accounts, and 30% is usually the most you should use.
One of the top ways to manage your shared credit card and avoid exceeding your utilization ratio is to make sure that you and your partner have individual and overall spending limits. Carrying a balance over 30% of your credit limit makes you accrue more interest and can ding your credit score.
Dialing back spending and paying down unpaid balances can help get your credit utilization on track.
Related Content: Does My Credit Score Affect My Spouse?
4. Decide Who is Going to Make the Payments
The best way to manage a shared card and avoid missed payments, late fees, and damaged credit scores is to establish which partner will oversee the payments. Several ways to do this reflect how you intend to use the card.
For example, if you use the card for 50-50 shared expenses, you can set the credit card up for automatic payments from a joint bank account.
If you both use the card but have separate accounts, one spouse can make the payments from their account. Then the other partner can commit to reimbursing the payee.
Set up your preferred method ahead of time so you don’t miss payments or hurt your credit score.
5. Strategize Your Rewards Redemption Plan
Now that planning, discussing, and setting limits are done, you can have some fun figuring out how you want to redeem your rewards.
If you want to make it a little more competitive and earn as many rewards as possible, consider setting goals such as a rewarding milestone or a check-in at some point during the year.
For example, you might want to cash in your rewards for a shared couple’s experience or statement cashback at 150,000 points. Or you might want to use shared points every six months on vacation. You might even decide to alternate which spouse gets to claim perks or rewards every milestone or year.
The options are up to you as a couple. You’re both on the same page and committed to making the card work for you and your mutual financial goals.
In the end, credit cards are a means of payment that can work. If you use them, your priority should be to remain debt free by not letting any balances carry over from month to month. That will free up your money so that you can move on to other finance matters like investing and paying off your mortgage.
Leave a Comment or Answer a Question Below: Do you use credit cards? If so, is it a joint account with your partner? What are the benefits you’ve seen from using your card? What are the downsides?
Image courtesy of Stephen Phillips – Hostreviews.co.uk on Unsplash
Speak Your Mind