Should You Consolidate Credit Card Debt as a Couple?

Debt can feel like a significant burden, and this is particularly true for high-interest debt, like credit card debt. 

For long-term partners (whether married or not), combining finances often makes sense. It’s a way to commit more to each other and simplify financial affairs. 

But what about debt? Does it make sense to share debts as well as assets? And if so, should you consolidate credit card debt as a couple?

This guide explores the basics of debt consolidation — pros and cons and all the other considerations that couples should consider. 

What is debt consolidation? 

Debt consolidation is the process of refinancing multiple debts into a single loan. 

For example, you might have three credit cards with balances of $2,000, $500 and $3,200. Your debt totals $5,700. 

In this case, you may be able to consolidate all three balances into one loan for $5,700. 

The money from the new loan could be used to pay off the old credit cards. This would cancel out those old debts — leaving you with only a single $5,700 balance. 

Debt consolidation can be achieved using personal loans, consolidation loans and even other credit cards (by transferring balances to a single card). 

Now you know what it is, but should you consolidate credit card debt? 

Debt consolidation is generally worthwhile when it can help you save money on interest. Consolidating to a lower interest rate can help reduce your monthly payments or help you pay off your debt faster. 

Another benefit is simplicity. Instead of paying multiple credit card bills with different due dates, interest rates and terms, you can consolidate them into a single loan. 

Should you consolidate credit card debt as a couple? 

Another reason people may wish to consolidate is to combine their debts as a couple.

For example, if a couple gets married and each of them has credit card debt, they could potentially apply for a joint consolidation loan to combine their debts. 

The question of whether you should consolidate credit card debt as a couple depends on several factors. Here’s what to keep in mind.

Advantages of joint consolidation

• You can use combined income from both spouses on your application

• If one partner has a poor credit score, the application may benefit from the other spouse’s higher credit

• If your combined credit and/or income improves your overall creditworthiness, you could qualify for a lower interest rate or better terms

• It simplifies your financial life

• It’s one symbol of financial commitment to one another (but it isn’t necessary to express commitment)

Overall, the main benefit is that sometimes couples may qualify for better terms when they combine forces. This isn’t always the case; it depends on each partner’s credit score and credit history.

Disadvantages of joint consolidation

• Both partners become legally obligated to pay off the new loan, regardless of whose responsibility the original debt was

• One or both partners’ credit scores may fall if the other partner’s credit history negatively impacts them

• Debt cannot be allocated in a divorce or separation agreement; debt is legally binding for both partners

The main disadvantage here is that consolidation makes both partners legally liable for each other’s debts. In a separation or divorce, both parties can be held liable for those debts by creditors.

Consolidating debt also shares financial risks with both partners. If one partner loses their job, for example, that could create significant financial strain and both partners would still be liable for the combined debt payments. 

How to combine credit card debt as a couple

There are a few ways to combine debt as a couple. Joint loans are the main way. In this case, both co-sign on a personal loan or debt consolidation loan. 

• Take out a joint loan: Couples could apply for a joint debt consolidation loan or personal loan. They then use this money to pay off all their credit cards directly, leaving them with only the new personal loan (which is in both of their names).

• Open a joint credit card and transfer balances: Alternatively, a couple could choose to open a new, joint credit card and then transfer old balances to the new card. However, balance transfers have hefty fees — often 3% to 5% of the amount transferred. 

• Consider a joint debt management plan: Another alternative is to develop a joint debt management plan with the help of a credit counseling agency. This process helps couples make an actionable plan for how to deal with all their debts, separate and joint. 

Bottom line

Should you consolidate credit card debt as a couple? It’s not usually necessary, but it depends on your situation.

Refinancing, in general, is usually beneficial, as it can lower interest rates or monthly payments. Whether to refinance individually (keeping debts separate) or together (merging all the debts) is up to you and your partner.