The newlywed stage is an exciting time of your life. There are many ways your lives will begin to intertwine. One of the biggest is your finances. Decisions must be made about joining bank accounts (or not), paying off debt, saving for the future and managing the monthly bills.
You may also want to marry up your credit card collection.
Having your partner apply for their own credit cards may double your ability to earn travel rewards and welcome bonuses, when done so strategically.
In this article you'll learn how to use credit cards as a duo, and supercharge the value you get. Here's what is covered:
- Identify your goals as a couple
- 3 ways to combine credit card forces
- Card-savvy strategies to earn rewards
- Considerations for newlyweds using credit cards
Identify your goals as a couple
Before closing or opening any new credit cards, you'll want to identify your goals as a couple. Depending on these goals, you may find that one strategy is more effective than another.
Are you saving up for a house? Planning an extravagant honeymoon? Do you want to pay off debt?
Take a look at where your dollars currently go and uncover what your largest spend categories are. This could tie back to what you enjoy most and want to focus on with a credit card strategy.
Do you frequently dine out? Do you travel regularly and love the perks that go with it?
Knowing your priorities will help you decide on a coordinated credit card strategy that gives you access to the places and activities you value most.
Combining credit card forces
There are three options to consider when harnessing your collective credit card power.
1. Get a joint credit card
Some couples opt to open a joint credit card account. With a joint account, you both share the same responsibilities in managing the account and are equally responsible for paying it back.
When applying for a joint card, be prepared for both of your credit reports to get a hard inquiry. A hard inquiry occurs when you apply for a new line of credit. Both reports will be pulled by a creditor and evaluated to determine how much of a risk you are as a borrower.
While many banks don't offer joint accounts, including Chase, there are some that have this option.
2. Add your partner as an authorized user
You can add your partner as an authorized user. This allows you to double down on the earning potential since each of you will have a card (with the same card number), in your wallets. This may be advantageous if you want to avoid a second annual fee. Some cards allow you to add an authorized user for free, while others charge a fee.
If you're planning to take out a loan or mortgage in the near future, this option may be a wise alternative to opening a new card. This is because there is no hard inquiry to a credit report when added as an authorized user, whereas opening a new account may affect a person's credit score for a period of time.
Keep in mind, when two people are able to use one credit card, you'll want to communicate about what the other plans to purchase. Most importantly, have a plan to pay at least the minimum payment by the due date.
3. Keep your accounts separate
Another option is to manage your finances individually and keep your credit card accounts separate. If you both have good credit, this can be a strategic way of increasing the number of rewards points and welcome bonus offers you can earn individually, then pool together.
Certain rewards programs, such as the Chase Ultimate Rewards® program, offer high value and flexibility. Earn bonus points on select purchases and redeem for travel, gift cards, cash back and more.
For couples managing their credit cards separately, Chase's flexible redemption options come in handy. You can transfer your rewards to various travel partners, you can also combine your points with your partner or transfer them to a designated member of your family.
Card-savvy strategies to earn rewards
If you each decide to get your own cards, there are ways to strategically use them to earn points or miles toward the things you love most.
If you and your new spouse enjoy a specific airline or hotel chain, you may want to double down on that one loyalty program. You would each get the same branded loyalty credit card, but manage them as two separate accounts with two streams of earning potential.
If you're devoted to one brand and one kind of redemption, this strategy makes sense. Every dollar you spend goes toward that goal to earn points. Then redeem for airline tickets or hotel stays in your dream destination.
If you're not necessarily loyal to one brand, you can pair up in a complementary way. One person gets an airline rewards credit card and the other focuses on a hotel brand. If each of you earn a welcome bonus, you may have a head start on banking points for future travel.
If flexibility is the name of your game, make sure at least one of you has a card that earns points for everyday purchases. In addition, you'll want to choose a rewards card with flexible redemption options, such as Chase Ultimate Rewards®. As mentioned above, this program gives you the option of transferring points to a participating loyalty program later, if you so choose.
Considerations for newlyweds
As with any part of your converging financial journey, you'll want to consider a few important things when it comes to credit cards.
Many rewards cards have annual fees, typically ranging from $95 to $550. This is charged once a year, though some card issuers will waive that fee for the first year.
If your card earns rewards in a specific category where you spend a lot, it may make sense to pay the annual fee. However, you'll want to do the math before signing up.
Cards you had before getting married
Perhaps you and your partner have credit card accounts still open that you've used for many years before getting married. Before closing these old ones, be aware of potential implications.
If your accounts are in good standing, closing them may actually hurt your credit for a period of time. Not only do you lose that available credit, but it could increase your credit utilization ratio. This ratio is the percentage of your available credit that is currently being used. You generally want to keep that to 30% or lower. This is because lenders use that ratio to determine the level of risk you may pose when applying for additional credit.
In some cases, it may be best to keep those accounts open, even if you don't use them regularly.
Paying your credit card bill
Most important of all is to ensure you're able to pay your credit card bill by the due date. As you join forces and adopt these new credit card strategies, be sure to communicate with each other about what each partner is spending, and if it aligns with your income and budget.
If you play your cards right (pun intended), you and your spouse can use credit cards as a tool to earn rewards toward the things and experiences you love most. Identify your goals, decide on a strategy and make sure you can pay your bills every month. Perhaps there's a second honeymoon in your future — and if so, you can bet there's a card for that!