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

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

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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Learn more about credit cards

How easy is it to get a credit card?

For most Australians, there are no great barriers to applying for and getting approved for a credit card. Here are some points that a lender will consider when assessing your credit card application.

Credit score: A bad credit score is not the be all and end all of your application, but it may stop you being approved for a higher credit limit. If your credit score is less than perfect, apply for the credit limit that you need, rather than the one you want.

Annual income: Most credit cards have minimum annual income requirements. Make sure you’re applying for a card where you meet the minimum.

Age & residency: You need to be at least 18 years old to apply for a credit card in Australia, and most require that you are an Australian citizen or permanent resident. However, there are some credit cards available to temporary residents.

What should you do if your credit card is compromised?

Credit card fraud is a serious problem. If your credit card is compromised and you’re wondering what to do, here are a few precautionary steps to take.

Contact you credit provider – Get in touch will your credit card provider. If you feel your card has been compromised, you should be able to lock or block it.

Monitor your accounts – Keep an eye on your credit card accounts. Any unauthorised transactions could be a sign your credit card has been compromised.

Check your credit rating – It’s also important to check your credit rating, to ensure you’re not a victim of identity theft or some other financial mischief.

How do you use credit cards?

A credit card can be an easy way to make purchases online, in person or over the phone. When used properly, a credit card can even help you manage your cash flow. But before applying for a credit card, it’s good to know how they work. A credit card is essentially a personal line of credit which lets you buy things and pay for them later. As a card holder, you’ll be given a credit limit and (potentially) charged interest on the money the bank lends you. At the end of each billing period, the bank will send you a statement which shows your outstanding balance and the minimum amount you need to pay back. If you don’t pay back the full balance amount, the bank will begin charging you interest.

Can a pensioner get a credit card?

It is possible to get a credit card as a pensioner. There are some factors to keep in mind, including:

  • Annual income. Look for credit cards with minimum annual income requirements you can meet. 
  • Annual fees. If high fees are a concern for you, opt for a card with a low or $0 annual fee. 
  • Interest rate. Make sure you won’t have any nasty surprises on your credit card bill. Compare cards with a low interest rates to minimise risk.

Do you need a credit card to get a loan?

You do not need a credit card to get a loan, but you usually need to have a credit history. Without a credit history, a financial institution cannot assess your ‘credit worthiness’, or your capacity to pay off the loan.

If you don’t have a credit card, your credit history can reflect any record of paying off an asset. Without any credit credit history, you’re limited in the type of loans you can apply for. But you may be able to obtain a secured loan against an asset. For more information on improving your credit score, go here

What should you do when you lose your credit card?

Losing your credit card is a serious situation, and could land you in financial trouble. Here is a simple guide detailing what to do when you lose your credit card.

Lock you card – Contact your provider and inform them about your lost credit card. From here lock, block or cancel your card.

Keep track of transactions – Look out for unauthorised credit card transactions. Most banks protect against fraudulent transactions.

Address recurring charges – If your card is linked to recurring charges (gym membership, rent, utilities), contact those businesses.

Check credit rate – To ensure you’re not the victim of identity theft, check your credit rating a month or two after you lose your credit card.

Should I get a credit card?

Once you've compared credit card interest rates and deals and found the right card for you, the actual process of getting a credit card is quite straightforward. You can apply for a credit card online, over the phone or in person at a bank branch. 

How do you apply for a credit card?

You can apply for a credit card online, over the phone or in person at the bank. Once you’ve compared the current credit card offers, the application process is quick and easy. Before you get your application started, you’ll need to gather your personal information like proof of ID, payslips and bank statements, proof of employment and details of your income, assets and liabilities. To be eligible for a credit card, you’ll need to be an Australian citizen over 18 and earn a minimum of $15,000 each year. Once you’ve applied for a credit card, you should get a response fairly instantly. If your credit card application has been approved, you should receive a welcome pack with your new credit card within 10-15 days.

How do you use a credit card?

Credit cards are a quick and convenient way to pay for items in store, online or over the phone. You can use a credit card as a cashless way to pay for goods or services, both locally and overseas. You can also use a credit card to make a cash advance, which gives you the flexibility to withdraw cash from your credit card account. Because a credit card uses the bank’s funds instead of your own, you will be charged interest on the money you spend – unless you pay off the entire debt within the interest-free period. If you pay the minimum monthly repayment, you will be charged interest. There are many different credit card options on the market, all offering different interest rates and reward options.

How to pay a credit card

There are a few ways to pay a credit card bill. These include:

  • BPAY - allows you to safely make credit card payments online.
  • Direct debits - set up an automatic payment from your bank account to pay your credit card bill each month. You can choose how much you want to pay of your credit card bill when you set up the auto payments.
  • In a branch.
  • Via your credit card provider's app.

How to get a credit card for the first time

A credit card can be a useful financial tool, provided you understand the risks and can meet repayment obligations.

If you’re a credit card first-timer, review your options. Think about what kind of credit card would suit your lifestyle, and compare providers by fees, perks and repayments.

Once you’ve selected a card, it’s time to apply. Credit card applications can generally be completed in store, online or over the phone.

When you apply for a credit card for the first time, you must meet age, residency and income requirements. As proof, you must also provide documentation such as bank account statements.

How to get rid of credit card debt

  1. Calculate your debt. Credit card calculators make it easy to determine the repayments required to chip away at your debt in the shortest timeframe possible for your budget.
  2. Repayment plans. Take some time to formulate a credit repayment plan. Consider increasing your income, scaling back your lifestyle or refinancing.
  3. Talk to your credit provider. If you’re still struggling with your debt, give your credit provider a call. You may be able to come to a new arrangement.

What is a balance transfer credit card?

A balance transfer credit card lets you transfer your debt balance from one credit card to another. A balance transfer credit card generally has a 0 per cent interest rate for a set period of time. When you roll your debt balance over to a new credit card, you’ll be able to take advantage of the interest-free period to pay your credit card debt off faster without accruing additional interest charges. If your application is approved, the provider will pay out your old credit card and transfer your debt balance over to the new card. 

How to make a credit card online

If you’re wondering about how to make a credit card online application, here are some steps to follow:

  • Test the market. Many credit card options are available online. Compare providers by fees, interest and perks to ensure you’re getting the best deal.
  • Complete the application. Once you’ve selected a card, head to the provider’s website and complete the online credit card application form. Forms vary by providers.
  • Provide details. Most cards require you to meet age, residency, income and credit status condition, and you need to provide details like a bank account statement to prove this.
  • Review details. Ensure the information you’ve entered is correct.