What is a joint credit card?
A joint credit card is one that's held in the names of two people. Each person needs to apply and be approved for the card, and they are jointly responsible for paying off any debts incurred.
Typically, individuals who hold a joint credit card each have a physical card linked to the one line of credit. They have equal access to funds, with the ability to spend money up to a limit set by the lender.
When you have a joint account, you share responsibility for any debts connected to that account, and in the consequences of being unable to repay that debt, which can include a bad credit report.
Joint credit card vs additional cardholder
A joint credit card is different to a credit card that has a nominated additional cardholder (or cardholders). Additional cardholders also receive a physical credit card and are able to use it with few or no restrictions.
But, typically, they don't carry any liability for the debt on the card. The primary cardholder is responsible for paying the debt, including any spending made by the additional cardholder.
How do you apply for a joint credit card?
The process of applying for a joint credit card is similar to the process of applying as an individual. Both applicants need to be at least 18 years or older and be NZ citizens or permanent residents.
It's often possible to apply online, or you can call the card provider or visit a branch, if the card is issued by a bank. Bear in mind that some lenders require you to visit a physical branch if you want to open a joint credit card.
Generally speaking, when applying for a credit card, the lender will ask to see supporting materials such as proof of income (typically in the form of pay slips) and a breakdown of your regular expenses, as well as any assets and liabilities you might have. When applying for a joint credit card, the income, expenses and assets of both applicants are considered.
When you apply, it's likely that a lender will also consider your credit score, a number that is meant to represent your record as a borrower. When you apply for a joint credit card, the lender will consider the credit scores of both applicants.
Can you get a joint credit card in New Zealand?
Not all credit card providers issue joint cards, so if your card of choice isn't available with a joint-account option, you may have to consider applying for a regular, single account and adding an additional card holder.
But, whatever you decide, make sure you explore what's happening in the market first. Research the rates, fees and features attached to the available cards. And, think about how you and your partner spend money and repay debt.
It's well known that finances can cause tension in relationships. So, make life a bit easier on yourself by having some of the difficult conversations up-front. Set aside time with your partner to weigh up the available credit card options to help choose an option that works for you both.
Pros of a joint credit card?
Some potential advantages of a joint credit card include the possibility to save on fees, and holding each other accountable for spending.
Potential to save on fees: if you and your partner each have a credit card, then it's likely that you'll each pay costs, such as annual fees and other charges. One advantage of a joint credit card is the ability to pay one set of fees, cutting down on cumulative costs.
Potential to hold each other accountable: if you and your partner are on the same page about finances – or are trying to be – then a joint credit card can be a way to hold each other financially accountable.
Cons of a joint credit card?
Potential things to be wary of when considering a joint credit card include the smaller range of options available to you, the potential for disagreements about money and the potential for you or your partner to negatively impact each others' credit scores.
Smaller range of options: if you wish to take out a joint credit card, you may find your options to be relatively limited, as not all providers offer them. This means that, when comparing joint credit cards, you could find that you’re missing out on certain features – such as a more favourable purchase rate or interest-free period – if these things are not available on a joint credit card from your chosen provider.
Potential for disagreements about money: if you and your partner have different attitudes to spending, then it may lead to disagreements, especially if one partner feels resentful at having to pay off debt accrued by the other. Similarly, you may not feel comfortable with your partner having access to a record of your spending, in which case, separate credit cards may be a preferable option.
Possible negative aspect on credit score: if your credit history shows things such as late or missed credit card payments, then your credit score could be negatively affected, which can affect your ability to borrow money, or open a utility account. If you share a card with your partner and overspend, or you end up in a situation where you're faced with a large amount of debt in your name because of your partner's spending, your credit score will take a hit.
What alternatives are there to joint credit cards?
If you and your partner wish to combine your finances, but do not want to have a joint credit card, a joint transaction account could be a possible alternative, with separate debit cards.
This could have several of the advantages mentioned above – such as the ability to save on fees, manage spending and joint payments – and would allow you to spend your own money rather than take on debt.
And, of course, one of you can apply for a card and simply have an additional card issued on the account. Although as we mention above, the secondary card holder won't be legally responsible for any debt on the card.
