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You may trust your girlfriend with your life, but can you trust her with a supplementary credit card?
Disclaimer: Lest we be accused of being sexist, close-minded or intolerant, the points presented in this article applies to all romantic relationships between consenting adults. It's 2017, gender roles and expectations have changed quite a bit. We get it.
Depending on you who ask, supplementary credit cards are either convenient, or a form of voluntary identity theft. But the real tough question is when your girlfriend needs one and can't seem to get one on her own.
Should you give your girlfriend a supplementary credit card? Here's how to give an honest look at the situation.
Did She Ask for the Credit Card?
If your girlfriend is actually demanding enough to ask for the credit card, then you should rethink the fairness of that relationship. It's not healthy to always feel obliged to buy things for others.
As a relevant aside, we should remind you how awkward it might be to ask for the money back - even if she promises to repay you. This gets much worse if the relationship goes wrong, and she has made extensive charges on the card.
If she didn't ask for the card, but you want to give her one, that's probably a safer bet.
Do You Empower or Discourage Each Other's Spending?
The quickest way to end up in debt is to give a supplementary card to someone who empowers spending. In general, couples tend to either empower or discourage each other when they are faced with a buying decision.
Empowering partners will tell you it's alright, go ahead, there's a bonus coming up and they can make up the difference, etc. Discouraging partners will remind you of your limited budget. If your relationship is more like the former, forget the supplementary card. Your instinct will be to prompt her to use the card, even when she's hesitant to buy.
Did You Set a Credit Limit?
Whenever you're giving her a credit card, change the credit limit. We usually suggest to setting the limit at one month of your income, rather than the usual two to four times. This isn't out of some sexist assumption that women always overspend.
This is a safety measure. When there are two cards, there is a greater probability that one of them will be lost or stolen. And you don't want an identity thief to have access to four times your monthly income.
Is There an Agreement on How the Credit Card Will Be Used?
In order to avoid fuming and silent resentment later, set guidelines. Come to an agreement on what the card will be used for, and how. For example, you might come to the agreement that the card is only to be used for food and transport.
We suggest setting a rule where, if an item or service would cost above S$100, the purchase is to be discussed with you first. We know that many consider talking about money to be unromantic - but trust us, nothing is more unromantic than the inevitable fight about money if you don't communicate.
Do You Have a Plan In Case the Relationship Ends?
In case the relationship sours (touch wood), do you have a plan on what to do with the card? At the very least, be clear on the process and steps you can take to cancel the card quickly; in nasty break-ups, access to your credit account makes for a convenient target for revenge.
Remember it will be awkward and difficult to take about money (or to talk at all) following a break-up; so you don't want to end up having to calculate who-owes-what or set a meeting to retrieve the card.
As mentioned earlier, set a credit limit (so your losses are contained if things go wrong), and be ready to cut off the card with a quick call.
Do You Have a Free Supplementary Card?
Many credit cards now give you a fee waiver for the supplementary card. If you don't have one, check out SingSaver.com.sg for some options. Don't pay money toward easily avoided fees.
Will She Agree to Not Have a Revolving Balance?
If you give her the card, can she commit to repaying what she spends - in full - before each billing cycle? Credit cards have an interest rate of around 2 per cent per annum; it's a bad deal if you only pay the minimum each month.
Before giving her the supplementary card, come to an agreement that whoever uses the card will repay what they owe in full, without letting interest accumulate.
Does She Understand Your Budget or Financial Situation?
It is best to share the details of your budget, or financial plans, before getting your girlfriend a supplementary card. This will set clear guidelines on how much can be charged to the card, without breaking your budget.
Remember that what she does with the supplementary card can affect your credit rating, which will impact future financial needs such as a home loan.
The key to balancing financial needs in a relationship is to communicate. Regrets and frustration over money can drive a wedge between you otherwise.