The time for newly married couples to find out each other’s credit score shouldn’t come when they’re applying for a car loan or filling out mortgage paperwork when looking for a home for the first time.
Yet too often these money talks continue to get dismissed or don’t happen at all, which means the reveal isn’t usually good news.
With summer wedding season in full glory, it’s important for couples to remember that they need to be on the same page financially.
Are there golden rules that work best for keeping things separate or joint and similar issues?
No, but all new couples should talk about money regularly and, whether it’s weekly or quarterly, review account balances, cash flow, and big upcoming bills.
Keep in mind that the unexpected invariably happens, but tackling money issues as a couple will keep surprise bills to a minimum.
People also read…
“Whatever tactic you employ, you definitely need to communicate on the broad metrics – how much of each paycheck goes to that separate or ‘fun’ account versus what’s needed for shared essentials,” said said Ted Rossman, credit expert and senior industry analyst. at Bankrate.com and CreditCards.com. “Are you on track with monthly bills as well as future planning, like saving for a future home purchase, retirement, your kids’ college education?”
I asked Rossman to comment on some of the money issues new couples face before and after marriage. Here are his thoughts, edited for brevity:
Should couples merge their finances?
Rossman pointed to a recent Bankrate survey, which found that 57% of Americans who are married, in a civil partnership, or living with a partner have at least separate financial accounts. This includes 34% who have a mix of joint and separate accounts and 23% who keep their finances completely separate.
But separate shouldn’t mean secret. The Bankrate survey also found that 32% of people in relationships engage in deception ranging from secret spending to secret debts, secret credit cards and secret checking or savings accounts.
The bottom line: As long as you communicate and work together, I think it’s your personal preference to combine your money, keep it separate, or mix the two approaches, Rossman said.
Do couples have to open a credit card together?
I think each partner should be the primary (or sole) account holder on at least one credit card account. It’s important to establish a credit history in your name, and it’s beneficial to have an account that belongs to you in case your spouse dies or you get divorced. It might also be a good idea to add the other person as an authorized user on one or more accounts if you like the idea of streamlining things and combining expenses and rewards.
Here’s another thing: you and your spouse could each get your own sign-up bonus if you apply for a card in your own name. This could be a great way to rack up twice the rewards points to fund a honeymoon, for example.
There are also impacts on credit rating. Primary account holder credit rating is proven to benefit more from positive payment habits.
But if one of the spouses goes into a lot of debt, it will lower the credit scores of both spouses.
Should couples have a prenuptial agreement?
It makes more sense when a partner has significant assets, such as a large inheritance, large investments, real estate, business, or even large debt, Rossman said.
Another likely scenario would be if someone has children from a previous relationship.
Questions, comments, column ideas? Email [email protected]