How Joint Credit Cards Can Impact Your Finances

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Your credit score is one of the biggest metrics to your financial success, and using a credit card is one of the top factors in determining your credit score. Many people get their first credit card as a joint card, usually with their parents. But how can a joint credit card impact your future financial success? AbbyBank is here to help you examine the benefits of joint credit cards and notify you of things you need to be aware of when you use them.

Key Definitions: Joint Credit Card vs. Authorized Card User

There are some key differences when it comes to joint credit cards, the first of which is knowing whether your card is truly a joint card. With a joint credit card, there are multiple users on the card and all users are held responsible for making sure payments are made. An authorized user, on the other hand, is not legally responsible for payments, but can still use the card to make purchases and build their credit score.

Benefits of a Joint Credit Card

If you use a joint credit card responsibly, you may see a faster improvement in your credit score compared to managing a credit card on your own. There are some important factors to consider when using a joint credit card to improve your credit score:
  • Ensuring that all account holders make timely payments can have a positive impact on each individual’s credit score.
  • Keeping the joint card active for a longer period of time can increase the average age of your credit accounts, which can generally boost your credit score.
  • Making sure that the amount of debt you have on the joint credit card is not too high compared to the credit limit. This is known as the debt-to-limit ratio and keeping it low is crucial for improving your credit score.

Drawbacks of a Joint Credit Card

If you’re thinking of getting a joint credit card, it’s a good idea to only do it with someone you know well and trust. You also need to make sure that person is financially responsible before putting the future of your finances on the line. Any volatility in spending or missed payments on a joint card can negatively impact your credit score. Failing to make payments or overusing your card can have negative long-term consequences for your finances.
To learn more about how a joint credit card can be a financial tool for you, please contact AbbyBank to speak with our team about how you can use your credit card responsibly.