There are many reasons that may lead you to decide to open a joint credit card. You and your spouse may want to use the credit card for shared expenses. You might decide to open a joint account to help your child build their credit history. But what happens when you want to close that joint account, such as in the case of a divorce or when your child is ready to continue building their credit history independently?
Closing a Joint Credit Card Account
Closing a joint credit card account can be challenging if there is an outstanding balance. Some credit card issuers may require you to pay off the balance before closing the account.
The first step to closing the joint account is to contact your credit card issuer. They will guide you through the necessary steps to close the joint credit card account, including whether you need to pay off the balance before closing it.
Even if the credit card company allows you to close the account while there is a balance, you will still be responsible for paying the balance according to the original terms. You must at least pay the minimum due amount each month.
Paying Off a Joint Credit Card Balance
With a joint credit card, both cardholders are responsible for paying the charges, even if the purchases were made by only one person. This can become a challenge if you are closing the card due to a separation or divorce, or because one cardholder is no longer able to pay their share of the bill.
Note: If you are closing a credit card and want to avoid paying interest on the account, you must pay off the remaining balance in full.
Both parties must agree on who is responsible for the balance. This can mean one of three things:
- Both of you agree to be jointly responsible.
- One person takes on all responsibility.
- One person pays the bill in full with the understanding that the other will reimburse them within an agreed-upon timeframe.
Note: If you are going through a divorce, talk to your lawyer about the best way to handle a joint credit card account. Depending on state law, a judge may rule in favor of one spouse to pay the joint credit card debt if it is determined that they were exclusively responsible for the charges.
Joint Credit Accounts and Credit History
A joint credit card affects the credit history of both account holders. Any missed payments will negatively impact the credit scores of both cardholders.
To protect your credit score, you may need to make all payments on the joint account if the other holder is uncooperative.
Removing a Name from the Account
Unlike a credit card with an authorized user, you typically cannot simply remove one name from a joint credit card. Most issuers require you to close the account.
Note: An authorized user account is a sub-account of the primary account. It allows authorized individuals to make purchases on the account. The cardholder can contact the credit card issuer to remove authorized users.
Some banks and credit unions will allow the removal of a joint credit card holder, similar to the process for the authorized user. However, generally, the account cannot be modified until the balance is paid off and the card is closed.
Mitigating Damages
If the credit card issuer requires you to pay off the balance before you can close it, ask them to remove the ability to make new purchases. Once neither cardholder can make purchases, the other must pay off the balance and any joint debt obligations incurred earlier.
Note: You may consider transferring the balance to another credit card in your own name, so you can close the credit card without waiting for the balance to be paid off.
Once the card has a zero balance, contact the credit card issuer to ensure that the account is closed completely. Be sure to request that the account not be reopened at the request of either party. It’s also a good idea to monitor your credit report to ensure that the account is closed.
What
What Happens to Credit Score When Closing a Joint Account?
Closing a joint credit card will not remove it from your credit report, but as long as the account is closed responsibly – the balance has been paid off without any late payments – closing it will not significantly impact your credit score. Provided you do not open another card to replace the closed card, your credit utilization ratio (the amount of available credit versus the amount you have used or spent) will decrease. It will also reduce the number of credit card accounts, and it might affect the overall age of your credit history. Generally, these changes will be minor, and your score should recover over time.
If there are any negative items associated with the account, they will drop off your credit report after seven years. Meanwhile, you should continue making your payments and reduce the amount owed to protect your credit score.
Frequently Asked Questions (FAQs)
Can I Cancel a Joint Credit Card During Divorce?
Yes, cardholders can cancel or close a credit card account during a divorce. If there is a balance, you must pay it, either at the time of closing the account or afterward, through regular monthly payments.
Does Closing a Joint Credit Card Affect Credit Score?
Closing a joint credit card account responsibly, that is, paying off the balance first or continuing to pay on time until the balance is settled, will not significantly affect your credit score. Closing the account may reduce your credit utilization ratio (or the total available credit that you use), and if the card that was closed is one you have had for a while, it may impact the age of your account. Changes in these factors may lead to a moderate negative effect on your score.
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Sources
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts in our articles. Read our editorial process to learn more about how we fact-check and maintain the accuracy, reliability, and quality of our content.
Capital One. “How To Close a Credit Card Account.”
Consumer Financial Protection Bureau. “Am I Responsible for Charges on a Joint Credit Card Account if I Didn’t Make Them?”
Consumer Financial Protection Bureau. “Do Joint Credit Card Accounts With My Spouse Affect My Credit Score?”
Navy Federal Credit Union. “Account Holder Change. Page 2.”
Capital One. “What To Know About Joint Credit Cards.”
Consumer Financial Protection Bureau. “How Do I Remove an Authorized User From My Credit Card Account?”
Experian. “Closing a Credit Account With a Zero Balance.”
Consumer Financial Protection Bureau. “How Long Does Negative Information Remain on My Credit Report?”
Equifax. “How Closing a Credit Card Account May Impact Credit Scores.”
Source: https://www.thebalancemoney.com/how-to-close-a-joint-credit-card-account-3959851
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