How a Shared Credit Card Account Is Killing Your Holiday Spirit

Editors' pick: Originally published Nov. 18.

If you think the holiday season is stressful now, just wait until the person you share a credit card with second guesses every cent you spend.

We've already become a nation of snitches and narcs -- a scared little group of huddled titmice that's all too willing to embrace "If you see something, say something" as a model for living. That makes it perfectly reasonable for 17 million U.S. credit cardholders to snoop on the spending habits of someone they share a credit card account with, as cardholders admitted in a new survey by CreditCards.com. One in five cardholders admit to peeking at another person's online (16%) or paper (12%) credit card statements, which should make things lively in U.S. households where the National Retail Federation already predicts the average consumer will spend more than $935 this holiday season.

We're told that we're supposed to be overjoyed that those percentages are down from June 2008, when 20% were eyeballing printed account statements to see what someone else was spending, while 15% went online to play auditor. But when 17% now say they feel closer to the other person because of the shared account -- almost double the 9% who said so eight years ago -- that just makes these violations of trust worse. After all, it isn't as if you're handing a stranger or coworker your card: 48% of shared accounts are with a partner or spouse and 10% are with an adult child. Just 5% are with children under 18, which suggests that there's far more financial babysitting going on between adults than there likely should be.

Not surprisingly, this resulted in 19% of joint accountholders getting into arguments over those accounts during the recession and 12% still doing so today. While it's understandable that parents and children might squabble as important lessons are being taught, those sharing cards with adult children seem just as likely to bicker about spending and close accounts as a result.

"When you share an account with someone, it's important to know what the other person is doing," says Matt Schulz, CreditCards.com's senior industry analyst. "Ideally, you'd talk frequently and openly with the other person, but if that doesn't happen, checking in on your fellow accountholder's spending can help you sniff out problems before they get out of control."

What problems, you ask? The same problems that led 13 million Americans to keep a hidden bank or credit card account from their live-in spouse, partner or significant other, according to a CreditCards.ccom survey from earlier this year. On top of that, 41% have spent over $100 without their spouse or partner's knowledge, including 19% who have spent more than $500.

That said, this form of "cheating" somehow fosters more trust than transparently sharing an account with someone. While 19% of Americans have secretly spent $500 or more, 24% believe that their spouse or partner should be able to spend more than $500 without letting them know. Also, while 41% of Americans say they've spent more than $100 without telling, 47% said they'd be O.K. with their spouse or significant other spending more than $100 without being told about it.

At the midpoint of 2016, according to the Federal Reserve Bank of New York, total U.S. credit card debt hit $729 billion, up $26 billion from a year earlier. That's more than U.S. homeowners have taken in home equity loans ($478 billion), but still less than auto loan debt ($1.1 trillion,) student loan debt ($1.26 trillion) and mortgage debt (more than $8 trillion)Yet, according to NerdWallet 's annual American Household Credit Card Debt Statistics Study, U.S. consumers don't have all that much cash to sneak around with. Median household income has grown 26% percent since 2003, but medical costs growing by 51% during that same span. Meanwhile, food prices are up 37% during that time.

Also, if you're running up credit card bills behind your spouse's back, you're just building the amount of interest you're both paying. The average household already is paying a total of $6,274 in interest per year, which means that 9% of the average household income ($72,641) is being spent on interest alone. The average American household with credit card debt could spend up to 44 years paying down credit card debt if they only make the minimum payment on their debt each month.

That's exactly the kind of debt you don't want and the kind that Shomari Hearn, certified financial planner and vice president of Palisades Hudson Financial Group, says couples should be working to pay off. There's no value to carrying that debt whatsoever.

"'Good' debt creates value, Hearn says. "Education loans, business loans and mortgages can produce long-term wealth and may also offer tax breaks."

If both you and your spouse or significant other agree that you're in it together and that toeing the line on spending is something you both need to be responsible for, Hearn suggests creating a budget to ensure your annual expenses don't exceed income. However, recognize your limitations and set a budget that's realistic for your and your spending habits.

"Set a budget too rigidly, and you run the risk of abandoning it altogether," Hearn says. "A budget you ignore is useless."

It's a strategy that Millennials hard hit by the financial crisis know all too well. According to the CreditCards.com survey, Millennials and seniors are less likely to spend over $25 without their spouse or partner's knowledge than people between the ages of 30 and 64. Why? Because they already have enough debt eating into their future savings. When the folks at The Principal asked young investors to list their largest budget items, mortgage/rent (65%), food (38%), cars/transportation (30%), student loans (20%) and credit card debt (16%) all made the list. As they see it, all of the above is cutting into their plans for the future, so chipping away at it any more may not be cheating on their partner, but cheating on the plans they're making together.

"Many Millennials may see these large expenses—especially student loans and other debt—as primary obstacles to saving anything for retirement," says Jerry Patterson, senior vice president of retirement and investor services, for The Principal. "But in most situations, it's possible and necessary to both save for retirement and pay down debt by creating a plan and sticking to it."

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