In a recent study it was reported that nearly half of American households use credit cards to earn perks such as cash back, points to use toward purchases, and travel miles. Credit card companies entice users to run up debt so that substantial interest can be earned on balances owing. I have previously written about how credit card and other debt is divided in divorce. Today’s blog takes a little time to discuss what happens with the perks that are accumulated from the use of credit cards during marriage. How are they treated at the time of divorce and what options are available to divide them up?
Perks as a Community Asset. Credit card perks accumulated during the course of the marriage, just as any other asset accumulated by the couple during the course of the marriage, are considered a community asset and are subject to division at divorce.
So How do you go about dividing Credit Card Perks? These perks come in all shapes and sizes. Certain credit cards are associated with airlines and provide credits toward flights. Some provide cash credits that can be used to pay down balances or can be used for other purchases. Some cards offer points which again can be used for purchases, card paydowns, and other benefits.
Depending on what the benefit accumulated is, there may be some limitations on the options available to divide the benefits. The easiest way to divide them is to split and transfer them if that is an option. If it is a joint card you may be able to work with the card provider to transfer the credits. If they are cash reward credits the card holder can be charged the credit value in the overall division or the cash credit can be used to pay down or pay off any balance owing on the card to reduce the community debt. When the credits are not transferable, the parties can work together to use the credits, such as air miles, to purchase airline tickets in the future to accomplish the equal division. The perks can also be used on hotels, car rentals, and other benefits that can be used in the future by one spouse or the other. For any benefits that are not cash, agreement can be reached regarding the value of the perk and one spouse can receive it and the other spouse receive another community asset of similar value.
Just Another Consideration. By mentioning accumulated credit card perks, I am not trying to make things more difficult and come up with more things to fight about. It is just really something to think about, especially if during the marriage you ran your spending through credit cards for the purpose of taking advantage of the perks available. It may not be of significant value and if that is the case you can each consider simply receiving any perks associated with the cards held in your own name. By the time of divorce some couples have managed to accumulate significant benefits through their card use. If that is the case it makes sense to take some time and sort out a fair way to divide the benefits.
Often when we handle the issues of our divorce there are much bigger fish to fry than credit card perks. Whatever you and your spouse accumulate during your marriage is presumed to be community property and is entitled to an equal division. Whether or not you decide to take it up as an issue, you should at least be aware that perks are considered an asset appropriately considered and divided as part of the community estate.