Types of Credit Card Accounts

There are two different types of credit card accounts:  individual accounts and joint accounts.  When you obtain an individual account, you alone are responsible for repaying the debt.  When you open a joint account, usually with your spouse, both of you are responsible for repaying the debt. 

Individual Credit Card Account: Your income, assets, and credit history are considered by the creditor. Whether you are married or single, you alone are responsible for paying off the debt. The account will appear on your credit report, and may appear on the credit report of any "authorized" user. However, if you live in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin), you and your spouse may be responsible for debts incurred during the marriage, and the individual debts of one spouse may appear on the credit report of the other.

Advantages / Disadvantages of an individual credit card account: If you're not employed outside the home, work part-time, or have a low-paying job, it may be difficult to demonstrate a strong financial picture without your spouse's income. But if you open an account in your name and are responsible, no one can negatively affect your credit record.

Joint Account: Your income, financial assets, and credit history and your spouse's are considerations for a joint account. No matter who handles the household bills, you and your spouse are responsible for seeing that debts are paid. A creditor who reports the credit history of a joint account to credit bureaus must report it in both names (if the account was opened after June 1, 1977).

Advantages / Disadvantages of a joint credit card account: An application combining the financial resources of two people may present a stronger case to a creditor who is granting a loan or credit card. But because two people applied together for the credit, each is responsible for the debt. This is true even if a divorce decree assigns separate debt obligations to each spouse. Former spouses who run up bills and don't pay them can hurt their ex-partner's credit histories on jointly-held accounts.

Should I obtain a joint or individual credit card account?

Factors you should consider when deciding whether to obtain a credit card only your name or jointly with your spouse are as follows:

(1)  Do you have sufficient income and enough credit history to obtain a credit card on your own?  If not, you might have no other choice but to obtain credit along with your spouse.

(2)  Are you contemplating a divorce?  Women, particularly those in abusive relationships or who have not worked outside the home, need to order their credit reports and make sure they have sufficient credit to stand on their own two feet.  If you find your credit report is rather sketchy, take steps to obtain a credit card in your own name.

(3)  Do you want to be responsible for another's debt?  Although you might be able to get a bigger line of credit when you combine your assets with those of another person, you are putting your financial health at risk.  The person with whom you have obtained credit can run a card up to the limit, disappear and leave you with the bill.  They can come after you for the entire debt, not just half of it.  Similarly, divorce decrees often outline which party will pay off a particular credit card.  Be aware that the credit card company was not a party to the divorce decree and is not bound by its terms.  The credit card company can go after either original account holder to collect the debt.
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Can I Convert A Joint Credit Card Account To An Individual Account?

By law, a creditor cannot close a joint account because of a change in marital status, but can do so at the request of either spouse. A creditor, however, does not have to change joint accounts to individual accounts. The creditor can require you to reapply for credit on an individual basis and then, based on your new application, extend or deny you credit.

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