Is a Joint Credit Card Right for You? Here’s What No One Told You

Do you want to share your credit card with another person? Maybe you want your child to have access to money in an emergency, or maybe you and your partner just want to simplify your monthly payments. Whatever your reason, adding an additional cardholder to your credit card account has a lot of benefits—and risks.

Here, we’ll help you understand the benefits and risks of joint credit cards and empower you to make the best decision for your own finances!

What is a Joint Credit Card?

In the UK, joint credit cards technically don’t exist. The term ‘joint credit card’ is typically used to refer to a credit card that has two users: a primary cardholder and an additional cardholder. In this arrangement, both cardholders have a card, a PIN, and the ability to use the card. However, the primary cardholder alone is responsible for making payments and changes to the credit card account.

What’s the Difference Between Joint Bank Accounts and Joint Credit Cards?

The main difference between joint bank accounts and joint credit cards comes down to who’s responsible for the account and making payments. When two people share a credit card, the primary cardholder is fully responsible for making payments. Comparatively, both users of a joint bank account are responsible for the bank account and its debts.

Remember, in the UK, ‘joint credit cards’ technically don’t exist, whereas joint bank accounts are a common financial product, especially for people who live together.

Benefits and Drawbacks of Joint Credit Cards

Adding an additional cardholder to your account can be a savvy move, but it also comes with risks. Let’s take a quick look at the benefits and drawbacks of joint credit cards.

Benefits of Joint Credit Cards

• Simplified finances: Centralising your credit card usage to a single credit card can simplify repayments and increase transparency and accountability on spending habits.
• Access to better credit products: If someone has poor credit, adding them as an additional cardholder could give them access to credit products with lower interest rates than they’d otherwise be able to obtain.
• Maximise your rewards: With two people using a single card for spending, you can maximise the amount of rewards points you earn. Just be sure that you’re not making unnecessary purchases just to rack up more points!

Drawbacks and Risks of Joint Credit Cards

• Potential for financial abuse: Because you’re fully responsible for the credit card account as the primary cardholder, additional cardholders could use their card access to inflict financial abuse against you. By abusing their privileges as an additional cardholder, they could seriously damage your credit score, your ability to make repayments, and your overall financial wellbeing.
• They only build the primary cardholder’s credit: While additional cardholders can access better credit products, it won’t actually build their credit as you’re ultimately responsible for the card.
• Shared credit cards can put strain on a relationship: Whether you’re adding a family member, a partner, or anyone else as an additional cardholder, it can lead to conflict. Take the time to set expectations for how the card will be used to avoid this unfortunate risk. 

How do Joint Credit Cards Impact Your Credit Score?

There are two primary ways that adding an additional cardholder can hurt your credit score.

1. An additional cardholder can increase your credit utilisation ratio: With another user making purchases on the same credit card account, it can increase how much of your available credit is being used. If you use more than 25% of your credit limit, you could damage your credit score.
2. Additional purchases could make repayments difficult: You should always pay your credit card off on time and in full. If you can’t pay it off in full, you’ll accumulate debt and damage your credit score. Adding an additional cardholder could increase the card’s balance, making it harder to pay in full each month.

That said, adding an additional cardholder to your credit card account could also improve your credit score if you pay your balance on time and in full each month. Like with any credit product, using it strategically can benefit your credit score, while being careless can damage your credit score.

Best Practices for Joint Credit Cards

If you’re considering adding someone as an additional cardholder, take the following best practices into account before going through with it.

1. Understand the implications for your credit score: If the additional cardholder uses their card inappropriately, it will damage your credit score. Therefore, only people you deeply trust, like a spouse or partner for example, should be made additional cardholders. Never add someone as an additional cardholder before you’ve taken the time to think it through.
2. Set expectations: Given the impact an additional cardholder can have on your credit score, it’s critical you set expectations for using the card. Come to an agreement with the additional cardholder about how the card should be used.
3. Stay below 25% of your credit limit: With two users, regular spending could lead your credit usage to spike beyond what you’re used to. Make sure to pay your card off more frequently to avoid using more than 25% of your credit limit and inadvertently damaging your credit score.
4. Be firm: If you’ve set expectations and communicated how important appropriate credit card use is to your additional cardholder, hold them accountable. If they’re putting your financial health at risk, you’re within your right to remove them as an authorised cardholder.

Alternative Ways to Build Credit

As we mentioned, adding someone as an additional cardholder can give them access to credit products with better terms and interest rates—but it won’t actually help them build their credit. Fortunately, there are several other ways you can help your loved ones build credit, whether they’re just starting out or repairing poor credit.

Let’s take a quick look at some of the most popular and effective ways to build credit:

1. Use a credit builder card: Credit builder cards’ primary purpose is to demonstrate the user’s ability to make consistent, timely payments. Keep in mind that these cards have some of the highest interest rates, meaning they could accumulate debt and damage their credit score if they’re not careful.
2. Use a credit builder loan: You can think of a credit builder loan like a regular loan, but in reverse order. Once they’re approved, a lender will put the loan funds into a secured account, and they’ll make payments on it. These payments are reported to credit reference agencies, and if they’re made on time, they can help build their credit. When they’ve completed the payments (usually after 6-24 months), the funds are released to the loanee. 
3. Report rent payments to credit reference agencies: Rent is a common expense that people pay each month—but it doesn’t always help build credit. Fortunately, there are programs and services like Experian’s Rental Exchange and CreditLadder that report these payments so they help build credit. 
4. Use the Pave app: Credit builder cards and credit builder loans can be useful tools, but many people want to build their credit score without taking on additional debt. Fortunately, the Pave app can help build credit without any extra debt. By offering custom-targeted credit-building insights, helping users keep track of their upcoming payments, and reporting timely payments to credit reference agencies, we help our members build credit and learn strategies to do so long-term.

Ready to see how hundreds of thousands of Brits have paved their way to better credit? Download Pave today, or take a moment to share this article with your loved ones who are on the credit building journey!