Dual credit cards: Are they worth the risk?

Dual credit cards: Are they worth the risk?
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Having a dual credit card for your spouse or partner can provide savings, but it could also spell trouble if the relationship sours.

Most credit card providers allow people to apply for a second or even third card, sometimes at no additional expense. These ‘subsidiary’ cards can be in the name and signature of the second cardholder – typically your spouse or partner, and so can be used in the same way as a card held directly in their own name.

The annual fee on these subsidiary cards is usually waived, which provides valuable savings on card fees. And with only one set of statements to deal with, a subsidiary card cuts down on paperwork.

For some couples however, the value of a subsidiary credit card goes beyond cost savings. It’s a sign that you’re truly ‘an item’ – not just sharing good times, but also sharing fiscal responsibility for your combined card spending.

All good so far. On the downside, when you apply for a subsidiary card, the overall credit limit will reflect the debt repayment capacity of the primary cardholder. In a relationship where two people are high income earners, your total credit limit is likely to be higher if you apply for separate cards.

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This issue pales alongside the bigger question of responsibility for the card debt. It’s worth being quite clear that the primary cardholder is responsible for all the payments racked up on a subsidiary card. If your better half whips up a spending storm on the card, you’re responsible for the debt. And it’s your credit record that could be tarnished if you cannot meet the repayments.

This brings us to another pitfall. The stark reality is that Australia has a high rate of separation and divorce. Australian Bureau of Statistics figures show that in 2008, 118,000 couples tied the knot, while 47,000 applied for divorce. It all adds up to the real possibility that your relationship could hit the rocks. If a disgruntled ex decides to take solace in a card-fuelled spending spree, you need to act quickly to cancel the card.

Before applying for a subsidiary credit card, be sure to understand the advantages and disadvantages. The situation can work best if you both have compatible spending habits and savings goals. If that’s not the case, it could be worth avoiding credit problems by having separate credit cards.

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