Would you pay $75 for history?

March 24, 2011 · 45 comments

Girl Ninja and I have quite the predicament on our hands. When we got married we decided we would combine our financial lives. So far it’s been a relatively smooth process. That is, until recently.

Prior to getting hitched, Girl Ninja and I both had separate Alaska Airlines Credit Cards. The card has some pretty awesome benefits including; guest passes to Alaska VIP room, $99 companion ticket, one mile for every dollar spent, and triple miles for airline purchases. When you use your credit card as much as we do (remember $4,000 charged to it this month), we can rack up some pretty serious miles. These perks don’t come free though. The annual fee for the card is $75. Ouch.

Alright so here’s the problem. When Girl Ninja and I combined our finances, we didn’t really (and still don’t) know how to combine our credit. Neither of us want to give up all of that glorious credit history on our cards (six years for her and four years for me). I talked with Bank of America to see if we could somehow just transfer our credit cards to a new joint credit account, but was told that wasn’t possible. Am I the only person that thinks it’s stupid BoA wont just transfer one account history to a new account? I mean, it’s not like we are switching banks or anything!? I digress.

I was able to add GN as an authorized user to my CC account, so we are currently just using the card that’s in my name, while her card sits in a drawer in our office. That’s pretty stupid when you think about it though. We are essentially paying $75/yr to keep her credit history.

And thus the dilemma. Is $75/yr worth five years of credit history? Should we close the account and just leave her as an authorized user on mine. Should I close mine and go as an authorized user on hers? Should we close both of ours and find a rewards card with no annual fee? If we had just one card (meaning one $75/yr fee), we totally spend enough to justify paying the fee. But we definitely don’t receive double benefits for keeping two separate accounts.

Do you have a rewards card that has an annual fee? How do you justify paying it? Would you keep paying $75/yr on her dormant card just to keep her credit history?

p.s. Did you notice I added a Facebook “like” button at the end of each of my posts. You better start “liking” my stuff! If you don’t I’ll be forced to punch a baby walrus in the face!

**UPDATE** Faithful reader, SS4BC offered up a great solution to my predicament in the comments. You can see it by clicking here, or scrolling down and reading ‘em.

1 Kevin @ Thousandaire.com

Tell her to cancel her credit card and then get back in the kitchen!

2 ashley

Cancel yours! She has a longer history with the card.

We have an amex gold that has an annual fee somewhere around $100. That hundred dollars has turned into roughly $1200 between cashing out miles for amex gift cards, store gift cards and of course money off of delta flights. I personally love it.

3 Where's the Beef

We ran into that and I simply added my wife to my credit cards as a joint account holder.

http://credit.about.com/od/usingcreditcards/qt/jointcreditcard.htm

Closing a long standing card will lower your credit score a few points, but you only need credit to borrow money. If purchasing a home is still out on the horizon, she could build some of that back up before then. I wouldn’t lose sleep over it though.

4 Stephanie

Are you going to be able to transfer the points? That would be my only issue. (Then again, I don’t have any cards that have annual fees, thus far. If I were in that situation, I’d be cancelling both, I think…but then again, I have Discover. I don’t know what I’d do if they instituted an annual fee.)

I don’t think closing the card does as much damage as I’ve heard, but I’d probably make GN a joint cardholder rather than an authorized user…I don’t think you get the same credit score stuff as an authorized user?

5 Ninja

Authorized users don’t get any credit score stuff because they are not the account holder. We just added her on my card so we only had one CC bill to pay instead of two.

6 Ryan

While I believe the FICO people did change this slightly to reduce the “tag along” effect, I can say being an authorized user does carry some weight. I’ve been an authorized user on my dad’s Chase card for the past 2 years. My Experian credit report says I have a $10,000 credit limit on that card along with with a good payment history. At the very least, having this large limit is reducing my debt to income ratio.

7 SP

Are you buying a house in the near future (do you research on what qualifies as “near”, I’m not sure off the top of my head). Neither of you have another card? I’d close one of them (eventually, or now), but open up a separate free card in the other person’s name. It isn’t just $75, it is $75 every year, for your whole life! At least set yourselves up for being able to close one sometime in the future

I am fairly sure that MOST credit cards don’t let you open a “joint” card the way you can get a joint credit card. Having someone as an authorized user isn’t as good. If it were me, I’d have one card in each person’s name, and one card you used together. Of all those cards, none would have an annual fee – but if you insist on keeping your airline card, I would only keep one of them!

8 Donnie

Wait until you’ve bought your house, and your cars have a few years life left in them, then cancel and switch to a no-fee card.

9 joanne

Do not combine your credit cards. Only the primary card holder (not the secondary) will estabish credit (ie continue to establish and maintian). By each being the primary card holder you are maintaining your credit history. This is why stay at home moms etc find themselves without a credit score/history in the event of separation and/or divorce. Being secondary on the mortgage and/or credit cards does not provide you with a credit history as it is established under the primary name on the account.

10 SAM

I absolutely agree. And it’s not just divorce or separation… if GN gets rid of her card and you’re suddenly hit by a car 15 years from now, where does that leave her? To the extent that you can, maintain both of your credit histories. It’s about protecting yourselves and your family.

11 Mo D.

Totally agree! From day one, Hubby and I have kept our credit cards separate. A friend of mine from high school told me when his wife’s father passed away, her Mom had no clue about the banking/credit cards, etc. Because she was a stay-at-home Mom, she had no credit history of her own; he husband did all the banking, and her daughter had to co-sign for her credit card.

Hubby and I have open communication as to charges being on the CC; I have access to his statement on line, and same goes for him.

12 CityFlips

I have no idea what I’d do. Sounds like you get enough out of your card to justify the $75. I’ve never had a card with a fee though, so I don’t really know what to tell you. Maybe you could call and say you’re going to cancel because you don’t want to pay the fee and see if they waive the fee for being such a loyal customer.

13 Blue

When I was in college my mom added me as an “Authorized User” on her credit card in case I ever ran into an emergency and needed money fast. When I ran my credit report recently, her card was on it. I don’t think it’s true that “Authorized Users” don’t have their credit scores affected by the card. In fact, I’m pretty sure some parent’s add their kids to their cards to start building their teenager’s credit history.

14 Ninja

Unless you’re mom was a cosigner on an account for you, or you cosigned on hers, then it shouldn’t be on your credit report. Authorized users DO NOT appear on credit. You don’t need permission to add an authorized user, cause you are the person responsible for any charges that person makes. There’s a difference between authorized user, and account holder. I’d check in to why that account shows up on your credit report if you never signed any paperwork or anything.

15 Mercedes

I just checked on myFICO.com and according to them, being an authorized user DOES affect your FICO score, thus affecting your overall credit score… (check it out here: http://myfico.custhelp.com/app/answers/detail/a_id/71) There was a time a few years ago that they had decided that it didn’t have any bearing on your score, but they have since reversed that.

I also pulled my credit report not to long ago and a credit card that my mother put me on YEARS ago is still showing up (as paid off and closed, but it hasn’t hit the 7 year roll off date)

16 Ryan

To confirm, here is a snapshot of part of my credit report:

http://i.imgur.com/6wmOe.png

17 Ninja

Check this….

http://www.credit.com/credit_information/credit_report/Consumer-Alert-FICO-Formula-Changes.jsp

“A major change to the FICO credit score formula was announced by Fair Isaac Corporation in September 2007. FICO scores will no longer factor authorized user accounts into their credit scoring formulas.”

Remember creditors can report whatever they want, so I’m not surprised it’s showing up on your report. But when it comes down to it, you have ZERO obligation and it CAN NOT impact your in any way (good or bad).

Obviously in your case, it’s helping you out so there is no reason to dispute and have it removed, but if you wanted to you could :)

18 Ninja

That doesn’t make any sense. I added Girl Ninja as an authorized user on my card by calling BoA and telling them to put “Girl Ninja” on the account. They didn’t ask for her birthdate, SSN, or anything. Nor does this account appear on her credit.

I don’t get how you could be reported on your credit without you consenting to it in writing? Did you sign something in regards to the card you mentioned?

What would keep me from adding a million people as authorized users, defaulting on payments, and then damaging their credit. Something here doesn’t add up.

Does anyone else not think this is strange?

19 Ryan

On that link, it mentions that FICO changed their mind in 2008 and decided to include authorized users in scoring.

How it’s being reported is a GREAT question! My dad logged into Chase’s website and simply added me as an authorized user and a new card with my name was mailed out. My SSN/bday wasn’t ask for, just like BoA. When I was added, I wasn’t even 18 yet. They must has crazy database powers to match my name up with the correct report haha!

How long has it been since you added GN? Maybe it takes a few months?

I think what would keep you from doing that is you’d destroy your credit too, right?

20 LoganG

Ninja,

Your Credit.com article above is out of date, check out the update at the top of the page:

“Update: In July 2008, FICO announced that they reversed their decision and would continue to count authorized user accounts from their new FICO 08 scoring formula. Authorized user accounts are counted in current FICO credit scores, although the company has added additional features to block the impact of piggybacking services. Read more about how to establish healthy credit for the first time or rebuild after credit damage.”

I’m looking to apply for a new card and noticed that for authorized users, it DID ask for SSN/bday. So I guess it just depends on the issuer?

If you do close one of the accounts though, I would encourage you to be yours. Her 6 years trumps your 4.

21 Ryan

I would see if BoA would let just GN switch to a no fee card. Whenever I’ve filled out a credit card app, I’ve never seen a place for “joint account holder”, only “authorized user” so that may be why they can’t do it.

22 Ninja

Weird. Weird. Weird. Tell whoever let you be an authorized user to start defaulting (for the sake of research). I wanna see if they try to come after you, even they legally you have no obligation :)

23 Tom

I get 1% cash back with my Visa and I don’t pay any fees. That seems good enough for me. =)

24 Robert Muir

If you’re going to pay a fee, at least get something more out of it. Join Costco (for a fee of course) and sign up for fee-free Amex cards. Then you get a cash rebate in the mail each year that you can choose to spend on airline tickets if you choose, or something else if you don’t need to fly somewhere. We’re not crazy spenders or anything, but we get about $1,000 cash back each year from our Costco cards.

25 Ninja

I do get something out of it. Here’s the logic….

A free ticket on Alaska to pretty much EVERYWHERE they fly costs 25,000 miles. Now take your standard 1% cash back card. That means if you spent $25,000 you would get $250 back.

Here’s my thoughts. If Girl Ninja and I spend $25,000 we get 25,000 miles, or in other words a free ticket. It makes sense for us to keep the airlines card if our plane ticket would cost more than $250, but if the ticket is less than we should go rewards card.

Just about every flight we’ve booked in the last two years has ran at or above $250 (san diego to seattle). Having an airlines card is limiting in the fact that it can really only be used on airlines. But at the same rate I can spend $25,000 and get a ticket to NYC (~$400), or spend $25,000, get $250 cash, and then have to fork out another $150 to get to NYC. Miles cards aren’t as bad as they seem, as long as the person using them crunches the numbers and knows when it makes sense and when it doesn’t.

P.s. I love COSTCO!

26 Craig Ford

Ninja,
I’m going to agree with Robert, but help you get more miles out of your card. One of the things I do as research for my travel website is constantly search the web to find the best available cards. As a quick example you might look into the Starwood AMEX. You earn 1 point for every dollar you spend. However, when you transfer points to Alaska Airlines (or a dozen others) you get a 25% bonus when you transfer 20,000 points. Thus your 20,000 points become 25,000 Alaska Airlines points. Instead of spending $25,000 you only need to spend $20,000. It does have an annual fee of $65.
I know this doesn’t address your credit score issue. I just noticed a comment below suggesting you ask them about a no-annual fee card. That was exactly what I would suggest.

27 Melissa

Now, I’m from Canada, so it seems like things might go differently with credit down in the States, but one’s Credit Score is like a big, terrifying, horrifying thing that follows you around FOREVER, and doesn’t get wiped out when you suddenly have no credit cards. I believe there’s a penalty you hit for cancelling a card before you’ve had it a year, but other than that, people switch credit cards all the time, you know? I can’t see how cancelling a card would cause much of a hit on your credit. Assuming the credit card company won’t let you transfer points, I’d take the car with fewer points (probably Girl Ninja’s), use up the points, and the cancel that one. Done and done.

That said, whoever’s card is cancelled MUST get another one (just a no-frills, no-fee one or whatever), even if it just sits in a drawer. This is especially important if you cancel Girl Ninja’s card, since I know you guys plan for her to eventually be a stay at home mom. If you were to leave her/get hit by a bus/somehow otherwise disappear, she would be in a really tough spot. My mom’s actually forbid me from ever NOT having a credit card that is just in my name, regardless of the situation. She considers is a matter of safety, and I tend to agree.

28 Michelle

I keep it just for the annual companion fare $99. I look it as $99 plus $75 for a ticket that usually costs at least $350. I’ve actually debated having my husband get one too as we find ourselves flying from Houston to Seattle at least twice a year.

29 SS4BC

Cancel your card or see if you can downgrade your card to a no-fee, no-benefits card. $75 for credit history is ridiculous. And not worth it.

I was able to transfer a no-benefits card to a benefits card with BofA and keep my history, so I don’t see why you shouldn’t be able to go in reverse.

30 Ninja

had no idea we could just switch her card with BoA to another BoA card without a fee. If she can still keep her credit history, and we can avoid paying the fee, seems like a no brainer. We’ll have to use up her 80,000 miles first (hawaii?). But once we do, you better believe that’s what we’ll do! Thanks SS4BC!

31 SS4BC

Awesome! Glad I could help Ninja. You know I’m here for you. ;)

32 Blair

You shouldn’t have to use the miles before canceling/transferring the account.

33 margaret

You should cancel one of the airline credit cards and apply for a no fee card for either you or Girl Ninja to replace it. Even if you still primarily use the airline credit card, you could make a few purchases on the new card to maintain the credit history for the primary card holder. Discover card has no fee and offers 5% back on some purchase categories, depending on the month (sometimes groceries, sometimes gas, etc).

34 Stu

It doesn’t make sense to keep the 2nd card at $75/year just to maintain the history. If you can’t get rid of it now (4 or 6 year history) then next year your arguement is even tougher (5 or 7 year history). If one of you have another credit card that would minimize your “lost history time” then I would cancel that persons card.

Sidenote: I have two BoA credit cards and recently increased my max limit (don’t worry, no debt here). They gave me the option to shift limits between cards. ie, instead of having two cards each at 10k, I could have one at 5k, and another at 15k, or 1k and 19k….I dont have any annual fee cards and dont know how yours is setup, but you might be able to shift your max limit before cancelling a card. You still lose the history but maintain your available credit limit.

35 krantcents

If it is the credit history, add each of you as authorized users. If it is the fee, do a pro and con analysis to determine if the benefit out weigh the cost. I use one frequent flier card that has a cost of $140 per year. I earn enough miles to justify the cost.

36 StackingCash

Being held hostage by the credit score! My situation is that I have an ancient credit card I “inherited” from my parents from Citibank, member since 1977. I figured having that one card was enough until Citibank started pulling shit on me. I felt that I needed to keep that card because of its age and I had no other cards to replace it. I got several more cards now. Just need to let them age a bit before I think about cutting up my Citibank if they pull more shit on me.

Ultimately, you want to be your own creditor :) Keep stacking that cash!

37 Kaye

Glad that you were able to get some help from SS4BC. I was going to tell you that cancelling it now after 4-6 years of credit history (depending on whichever cancelled) and starting over with a credit history is better than paying a fee for 10 years and THEN having to start over with a credit history. A 15-year hit would be much worse than a 5-year hit.

38 Sandy X

Have you considered negotiating your way out of the annual fee?

39 shanny7351

Just wondering why you are so worried about credit scores, history and the such?? Are we all working toward being debt free and not held hostage by Trans Union, Experian and Equifax(sp?)?? If you are worried about a Mortgage in the future, there are lenders who look at a lot more than your credit history!! Don’t be like so many others who pay them (credit card, credit reporting agencies) for “their two cents” when it comes to the person you really are!!

40 CommonCents

I am a little perplexed about how you do your credit history in the USA. In Canada, even if you close your card your history will still say with you. Our ‘credit history’ includes more then just credit cards, it includes lines of credits, mortgages and student debt. Since my job is actually to advise clients on visa travel insurance and rewards; let me offer you this piece of advice. Pick a card that doubles your rewards when you have a Co-applicant on your account which is different from an authorized user. Let me explain: the Rewards Preferred Card offered by my bank gives trip cancellation insurance up to $2500 per family per trip. However if you have a co-applicant on your card like your wife her card has an additional $2500 in trip cancellation insurance. Thus when you and your wife go away on trips together you have up to 5,000 of trip cancelation insurance automatically added to your trip just because you put your trip on the Rewards Preferred Card.

Also Since you have two cards separately ask what the cost of adding her on as a co-applicant will be which is often cheeper (in annual fees) than her having her own account. By linking your accounts together you might also be able to combine your points together and transfer points between one card to the other, as they are linked under the same account.

But Be warned before you do anything with her account, US THE POINTS UP!!! As soon as you close her account you WILL lose those points.

For better understanding of how your card points and insurance system works consult the visa agreement that you signed when you got the card if its been a long time since you have opened the account, call the card centre and ask them to send you out the certificates of insurance/ credit card agreement. What ever you decided to do READ the certificates FIRST!!

41 Kyle

You can downgrade the card or just say you’re going to cancel and see if they offer you the card with no fee. Problem solved!

42 Mo D.

I had the same scenario happen recently when I paid off my Visa in full and decided to get a different card because I was feddup paying the $120 annual fee for my travel points card (which weren’t of much use to us anyway); they offered to waive the annual fee, lower the credit limit, etc.. anything to keep me as a customer. I still cancelled it. As Commoncents mentioned, being Canadian, I knew my really good credit history wouldn’t be affected by the cancellation of my Visa. I got our bank’s no fee Visa instead, and the points rewards are more in line with what is beneficial for me and Hubby.

43 Justin

I dont know that canceling one of your cards is going to destroy your credit history… but each of you could just keep a credit card of your own open. I think too many people worry about losing or gaining a few points with their credit scores. It will fluctuate over time, granted you dont want to take a 50 point dip,and I dont think you have to be concerned about that.

44 Bruce

Not sure why you would want to combine your credit, or other words have joint debt period. Makes no sense and is very risky. You’re a grown adult and will make your own decision, but think about it first. I don’t see any benefit in doing this.

45 Jenna

Yeah, I definitely wouldn’t keep spending $75 for a card I never use. Seems a little silly. There isn’t a “just married” combination offer? Weird.

Previous post:

Next post: