New Couples, Combining Finances

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Financial matters can be very sensitive issues for many couples. Personal finance commentator Michelle Singletary talks with Alex Chadwick about how engaged couples and newlyweds should combine their financial lives to avoid strife.


This is DAY TO DAY from NPR News. Michelle Singletary is back, she is personal finance contributor for DAY TO DAY. Michelle we have talked about weddings and getting married a couple of times this summer, but we haven't talked about this particular item. When you get married, you're a newlywed - what happens to your finances. And let's start with credit cards.

Ms. MICHELLE SINGLETARY (Personal Finance Contributor): Well you know, lots of couples, when they get married, they are under the assumption that their credit reports automatically merge because they are now one as a couple, and that's just not true. Your credit history remains separate, as long as you don't add one or the other to a joint account. And then only that account information is reported to your individual credit report.

So in other words, you maintain your separate credit reports, you maintain your separate credit history. The only time the information is reported on both your reports, is if you start signing up for joint credit, like a car loan or a house loan, or joint credit cards.

CHADWICK: So you maintain your individuality. But maybe you could help your spouse. I mean, one of you has a better credit rating than the other. Say, if you do get into joint loans or joint credit cards, will you help your spouse's history or is yours simply going to get trashed?

Ms. SINGLETARY: Yours won't get trashed. There's no bleeding(ph) of the information. So if you say you have a really good credit history and you've got a credit card that you've been paying on time, everything's going great, you can add your spouse to that credit card - then that positive information will then start to be reported on his or her credit report and that will help boost their credit score. So that's one way, you can add them to one of your existing credit cards and all that history will then be reported on theirs, and that can significantly help their credit score.

Or going forward, if you're the one that who knows to pay the bills on time and you maintain control over that particular bill, you can get a get joint credit card, or car loan or house loan, and than that positive information will then start to be reported on your spouse's credit report.

CHADWICK: Well here's a question for a personal finance advisor, what do you say when people say, should I have joint accounts with my spouse or not? Joint credit cards, joint savings accounts, joint checking accounts?

Ms. SINGLETARY: I believe that you should. Now if you're very nervous about that, or you're dating someone whose credit-challenged, then you may want to take a step back and not join - even your life with this person - if you feel uncomfortable with the way they've handled their money. I believe that couples ought to have joint accounts, joint checking and joint savings, because it creates transparency. You want to know what's going on. You want to handle the bills together. And when everything is separate, that allows for things to happen that you don't know about.

CHADWICK: But do you maintain a private account as well?

Ms. SINGLETARY: (Laughs) I call it the home-wrecker hussy account. In case, you know, you run off with a home-wrecking hussy - or she with a guy. You know, no - no secrecies when you get married. It's commonly called financial infidelity - huge problem these days. You should not have a secret account, even if you decide to have separate accounts, which I don't advise. But even if you do, everything ought to be on the table. You ought to know what's in his account and he should know what's in yours, and vice versa. Everything ought to be on the table so that you know what's going on.

I cannot tell you how many couples I've met - when they go to get a home loan and then realize that their spouse has all this credit card debt or something that they didn't know about. So keep everything open, even if you're going to keep it separate.

CHADWICK: Michelle Singletary writes the syndicated column, the Color of Money, she's a regular guest on DAY TO DAY for discussions of personal finance. Michelle thank you.

Ms. SINGLETARY: You're welcome.

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