Why Get a New Credit Card?

Having good credit and securing your finances should be one of your top priorities when considering a divorce. A large credit card debt incurred by your spouse, whether unavoidable or intentional, can have a detrimental effect on your credit report and financial future, and can turn a well-intended divorce into an ugly one. It is important that you understand your liability and options so that you can make the best decisions. Your ability to get credit and your credit standing is one of the most important factors in your financial stability. We have researched and found a few companies with a wide variety of options that will help you make the best financial decisions for your situation. You can apply for them quickly and easily online at no cost. Keeping or establishing good credit is vital to your financial future. Below we explain the types of personal accounts, and the steps that you should take to secure your financial well being such as, when to get new credit cards, where to get new credit cards, and when to cancel credit cards.

Types of Personal Credit Card Accounts:

Individual Account –

An individual account is one where only one person is responsible for paying off the debt incurred. Multiple credit cards can be issued for other authorized users under one account. This option is used for family members that do not qualify for an account because they do not work or do not have a credit history such as a spouse or student. It is also often done due to convenience or simply to manage all debt and payments under one account. Remember, any late payments or lack of payments with any of the credit cards issued under the account will be reported under the name of the individual account holder.

If you have an individual account with multiple credit cards issued and wish to eliminate some users from having access, contact the issuer and cancel the extra credit cards. For more information, see the "When to Cancel Credit Cards" section below. In the event you must keep some active for family members, it is important that you keep close track of all debt incurred by those individuals.

The advantage of an individual account is that the account holder has control of how many credit cards are issued and who gets use of them. Therefore, you can choose to have only one issued and nobody else can affect your credit. The disadvantage of an individual account with multiple users is that you are ultimately responsible for all the debt incurred by all those with access to your account. These are important factors that must be considered when opening new accounts that will be further discussed in the "When to Get New Credit Cards" section below.

Joint Account –

A joint account has two individuals that are equally responsible for paying off the debt. Joint accounts can have one or multiple credit cards issued similar to the individual account. The advantage of a joint account is that it can be easier to qualify for a higher limit when two financial resources are used. The disadvantage of a joint account is that it does not matter who makes more money or who pays the bill regularly, if one of the holders does not pay, the cosigner is responsible for that debt. Any late payments or failure to make a payment will appear on both credit reports.

During a divorce, the court may decide that one of the spouses will be responsible for the entire balance or part of the balance owed on the joint account. If your spouse has been ordered to pay the balance and does not pay, the issuer will still request payment from you. Any late payments or lack of payments will go on your credit report as well. Keep in mind, although the court may decree your spouse is responsible for payment of the balance, the original agreement with the issuer is with both of you. Theissuer is not part of the court decree, thus will hold you responsible for payment. Issues of noncompliance have to be handled through the courts, and can be very time consuming and expensive. It is for this reason that we recommend you discontinue joint accounts as soon as possible. You should cancel your joint accounts, and transfer the balance to a new individual account under the person responsible for payment. You can also request for a joint account to be turned into an individual account. In some cases, the issuer may request a new application thus shop around for the best offer. For further discussion see "When to Cancel Credit Cards" section below.

When to Get New Credit Cards:

Now is the time to apply for new individual accounts, don’t wait for your divorce to be finalized. You will need access to credit once the agreement has been finalized for all your personal needs and purchases for your new home. The account will allow you to build credit history, and keep all your future purchases separate from your spouses’. You can also use the new account to separate your spouse’s debt by transferring from existing joint accounts. Applying for an individual account before your divorce is finalized has the advantage that you can use your joint income and thus may give you a higher credit limit than you would normally receive as an individual. You alone will be responsible for the new account, so use your higher credit limit only in case of a real emergency. If you are currently unemployed, applying for new accounts before the divorce allows you to get better terms than you would if you applied afterwards. Remember, with your new account, you and only you are responsible for paying off the debt so don’t over extend yourself.

Where to Get New Credit Cards:

Below is a list of credit cards that we recommend and you can apply for online. There is no cost to apply. We recommend that you apply for multiple credit cards, in the event you are not approved by one of the banks/companies. Having multiple accounts is also good for building a credit history. You may also want to consider transferring existing balances to your new accounts. Make sure to check for any promotional offers on balance transfers.

When to Cancel Credit Cards:

It is wise to split up your financial debt once you have decided to separate. You should cancel all your joint accounts and individual accounts where your spouse is an authorized user. The accounts that may need to be canceled include: major credit cards, store, gas company, and should be canceled as soon as possible. Make sure to cut them up once you have canceled them. This is something that should be discussed prior to the cancellation of your accounts. It should be made clear that dividing joint account debt and transferring the debt to individual accounts will reduce further financial stress and disagreements that can lead to a very stressful divorce. Give your spouse the time needed to make their own arrangements before you cancel joint accounts. Communication is very important, it is wise to make the situation as amiable as possible, to avoid any further discomfort or misinterpretation. Canceling your joint accounts without notifying your spouse will only make your situation more difficult as your spouse may interpret the cancellation as spiteful on you part and not as a practical solution to future problems.

The cancellation of your joint accounts is not an easy decision. Having large debts can complicate matters. If you cannot resolve the dispute over the division of debt, you should seek legal advice. Remember, any joint accounts with debts that are not paid will affect both parties’ credit report. This is also true of individual accounts opened after June 1, 1977 with your spouse as an authorized user. Therefore, if the dispute over how to divide the debt cannot be resolved quickly, it is best to avoid any further financial and emotional stress by making the minimum regular payments. The minimum regular payments should be continued until the issue can be resolved through the legal system, or as long as it is financially possible.

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