Credit cards are an important financial tool for most modern families. Married couples often rely on credit cards to cover unusual expenses that crop up between paychecks or budgetary shortfalls when there is a sudden drop in household income.
Credit card use can trigger disputes between spouses, especially if one spouse is prone to the frivolous use of credit while the other worries about keeping costs low. If spouses decide to divorce, credit cards could easily become a source of contention as they negotiate terms for their divorce proceedings.
The sudden loss of joint accounts
It is standard practice in many cases to freeze or close joint credit cards as soon as one spouse files for divorce. Doing so can cause financial challenges, especially if the spouses do not have separate accounts in their own names. Someone suddenly left without a line of credit they have a hard time covering their cost of living expenses at a time when those costs suddenly increase with little advance warning.
The division of the debt
Many households carry thousands of dollars in credit card debt from month to month. Figuring out how to divide that debt can be as challenging as splitting up valuable property. Some people may worry that they do not have the income to manage the high minimum monthly payments on their credit cards. Others may worry that their spouses could default on credit card obligations after the divorce, causing direct harm to their finances. The best solution for dividing credit card debt depends on the details of the marital situation.
The need to split credit card rewards
Many of the best credit cards have rewards programs that give people cash back, gift cards and free plane tickets. Many people accrue those rewards for multiple years before redeeming them. Those rewards could be worth hundreds of dollars in some cases or even more, and they may create another sticking point between the spouses as they negotiate property division in their divorce.
Understanding how credit cards can impact divorce proceedings may help people better prepare for negotiations with their spouses.