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Should you share a credit card with your partner or your kids?


Mark Bristow

By Mark Bristow

7 min read

Credit cards are pretty handy, and immensely versatile, however they also come with great risk. The innocent-looking piece of plastic sitting in your wallet is essentially a license to get yourself into enormous, nigh-unpayable debt.

Even if you’re financially disciplined enough to avoid running up huge credit card bills, the same can’t always be said for some of the other loved ones in your life – who may want (or already have!) access to your personal finances.

Sharing a credit card with your partner

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It’s not uncommon for individuals entering into a new relationship to each bring their own finances with them, such as their own bank account, credit card and so on. While this allows each partner to maintain their financial independence, it also means each partner will be charged fees and interest separately, and be unable to effectively combine their buying power.

It’s often not until a relationship has had a chance to develop and mature a little that many couples make a major commitment. Not a commitment to marriage (though that often happens too), but a commitment to joint finances, such as shared bank accounts, credit cards, even home loans! Combining finances can help a couple to borrow or buy more together than they’d be able to individually afford. Plus, it means being charged interest just the once, and paying just the one set of fees.

The terms and conditions for different financial products vary, but when it comes to credit cards, there are two options available for couples – joint credit cards, and credit cards with the option of adding secondary cardholders.

Joint credit cards

Pros
  • Both partners have full access to credit
  • Both partners improve their credit rating
  • Both partners earn benefits and rewards
Cons
  • Both partners responsible for debt
  • Defaults impact both credit ratings
  • Fewer lenders offer joint credit cards

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Joint credit cards are similar to joint bank accounts, in that there’s one credit limit, with each partner enjoying equal access to the account via their own card, and each sharing equal responsibility for its use. As well as being charged fees and interest just the once, both partners will enjoy the benefits of a joint credit card, such as improving their individual credit ratings and sharing in any bonus points or rewards offered by the lender.

When a couple applies for a joint credit card, their two credit ratings will be averaged together – if you have a bad credit history, but your partner has a good credit rating, your lender will assess your joint application as if you both had an average credit rating. While this can be good news for someone with a poor credit score, allowing them to borrow more than they’d normally be eligible to access, it can be less ideal for the partner with the higher credit score, as they could theoretically have been individually approved to borrow more money.

You and your partner should only ever apply for a joint credit card together if you trust each other implicitly. Because both partners are equally responsible for any debts on a joint credit card, if one or both of you spend up big or default on your repayments, both of your credit ratings will take a hit.

Primary and secondary cardholders

Pros
  • Both cardholders get access to credit
  • Less responsibility for 2nd cardholder
  • 1st cardholder gets benefits, improves CR
Cons
  • 1st cardholder responsible 2nd’s debt
  • Extra cardholders may cost fees
  • 2nd cardholder gets no benefits

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Because of the added complexity and risk involved with joint credit cards, not every lender makes this option available to borrowers.  As an alternative, they often allow the primary holder of a credit card to add an additional secondary cardholder to an account, or perhaps even more. Depending on the lender, adding additional cardholders to your credit account could be free, or you may need to pay a fee per extra cardholder.

In this arrangement, the primary cardholder carries ultimate responsibility for the credit card account. The secondary cardholder, on the other hand, gain access to the credit card account via their own card, but ultimately bears no individual financial responsibility for the debt owing on the account. Even if the secondary cardholder goes on a spending spree, it’s officially the primary cardholder’s responsibility to see that the debt is paid, lest it leave a black mark on the primary cardholder’s credit history.

This may not sound like the best deal in the world, especially if it looks like you’ll be the primary cardholder in the relationship. However, as well as bearing the responsibility for the credit card’s debt, the primary cardholder also receives all of the benefits from holding the account, such as improving their credit rating by demonstrating that they can manage debt, and earning any bonus points or extra rewards offered by the lender. The secondary cardholder earns no additional benefits from their credit card, other than being able to use it normally.

Sharing a credit card with your kids

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Your partner isn’t the only loved one in your life who could get access to your credit card – your children can as well. And we’re not referring to the various well-publicised instances of children inadvertently running up major debts by being a bit too liberal with in-app purchases and microtransations for online services linked to their parent’s credit card.

But did you know that it’s also possible to grant your child the same kind of access to your credit card as your partner? For many Australian lenders, the main qualification required to become a secondary cardholder on a credit card account is to be at least 16 years old.

While some parents may feel that giving their teenager practically unrestricted access to their credit card is a recipe for debt-fuelled disaster, it’s also possible that by showing your teen that a credit card isn’t an unlimited all-access pass to free money, you could help them learn more about financial responsibility in their young adulthood.

If you’re interested in offering your teen a degree of financial independence, but aren’t quite prepared to sign them up as a secondary cardholder on your credit card just yet, there are alternative options available:

  • Most bank accounts for teens offer access to a debit card, allowing teens to access money from their own bank account via ATMs, or make EFTPOS transactions in shops. Some lenders offer debit cards that also provide credit card functionality, such as VISA debit cards and Debit Mastercards. These cards can be used for online and overseas transactions, but are limited by the amount of money currently in the account, so your teen won’t go into debt.
  • Prepaid credit cards work in a similar fashion to gift cards from supermarkets and chain stores, in that they come pre-loaded with a balance of money, which can be spent anywhere that credit cards are accepted. Whenever the balance runs out on your teen’s prepaid credit card, they’ll have to come to you for a top-up, allowing you to have a say in how much they’re spending.
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