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Pros and cons of joint borrowing

From paying for a wedding to buying a property, there are many reasons why you may want to borrow money with your partner.

Before you get a joint loan or any other form of shared credit, understand some of the benefits and risks involved.

Advantages of borrowing money together

There are several advantages to taking out joint finance. For example, you may be able to borrow more money than you could by yourself. This could help you:

It can also make it easier to manage debt, as together you may be able to afford the repayments more comfortably than you would by yourself. And if one of you is not earning an income for a period, you’ll ideally still have the other person’s income to fall back on.

Risks of taking out a loan or overdraft as a couple

If you take out a joint loan, you are both responsible for paying back the total amount, not just your half. If one person refuses or can't pay, the other must repay the loan.

If you have a joint current account, you probably have a joint overdraft too. Again, it’s important to remember that, if you use your overdraft – you are both responsible for paying back all the overdrawn money.

A partner’s poor credit score can also affect yours. When you have debt with someone, your credit history will be linked to theirs. If you apply to borrow money in the future, even if it’s in your name, the lender can take the other person’s credit history into account, as well as your own. 

It’s a good idea for both of you to check your individual credit reports before you apply.

Risks of sharing a credit card

In the UK, you can’t get a joint credit card. A credit agreement is signed by only one person. You can, however, give your partner access to your credit card account by adding them as an additional card holder. They’ll receive a card that links to your credit account.

Remember – additional cardholders are not legally responsible for making payments. You should only add people you trust, as you could be left having to repay the debt.

Explore: Tips for paying off your credit card

Joint debt after separation

Relationship breakdowns can be difficult and impact your finances. Any debts you have with your partner will have ‘joint and several liability’. This means, if your partner refuses or is unable to make the repayments, you’ll need to repay the full amount. 

If you have joint debts, these will still need to be paid after a separation, although it’s worth letting your bank know if you’re no longer together. 

If necessary, your bank may be able to freeze any joint accounts. They can also remove your partner from your credit card account if they're an additional cardholder. However, you'll still be responsible for repaying anything they may have spent on your credit card.

If you’re dealing with separation and want to discuss your finances, we're here to help.