Often, couples will use credit cards to manage bills and other spending, and build up rewards points as a result. But can you split such rewards and how is any outstanding credit card debt dealt with when you divorce? This article looks at the law surrounding this issue.
Often, couples will use credit cards to manage bills and other spending, and build up rewards points as a result. But can you split such rewards and how is any outstanding credit card debt dealt with when you divorce? This article looks at the law surrounding this issue.
If you have need help with your divorce and you feel you need legal advice, contact specialist family solicitor Mark Heptinstall of Slater Heelis Solicitors. He is recognised as a ‘Leading Individual’ in The Legal 500 and ranked in Chambers UK, and is described as having “the amazing ability to bring calm into troubled waters”.
What are credit card reward points?
Credit card points are a type of reward currency that can be earned in exchange for eligible credit card spending, offering things like shopping points, cashback, or air miles. The value of the points, eligible spending criteria, and how/when they can be redeemed will be different for each credit card provider.
How do “joint” credit cards work?
Credit cards are generally taken out in one person’s sole name with an additional cardholder, such as a spouse, being named and having their own card. Here, it will only ever be the main card holder who is responsible for any other cardholders to the credit account. This includes all expenditure and repayments, regardless of how the money was spent and by whom.
It is important to note that the court does not have the power to split a debt or transfer it into another person’s name. If the debt is considered as being jointly accrued, then the court will usually award the account holding party a greater share of a particular matrimonial asset to compensate them in respect of the outstanding liability. It is up to the account holder whether they use this to pay off the debt.
Will my ex get all the credit card reward points?
The division of matrimonial assets is based on the principle of fairness, sharing both liabilities and assets from the starting point of equality. If the credit card debt was accrued over the course of the marriage, the primary position is that it will belong to you and your spouse equally and will be reflected in your share of the assets and liabilities in the settlement.
There is an argument that since the account is only in one spouse’s name, they should assume all the reward points. However, divorce law is not that simple. Because this type of debt is likely to be considered matrimonial, any reward that has accumulated alongside the liability should arguably be shared, too. It would be unjust to expect the debt to be satisfied and not account to the other party for the rewards accumulated over the years of spending.
Can credit card reward points be shared?
The court has wide discretion when making financial orders on divorce, and this includes the ability to make property adjustment orders. However, the court does not have the power to transfer debts from one person to another. This is why they are factored into a financial settlement and form part of how the matrimonial asset pot is ultimately distributed.
As we have already established, the starting point for sharing matrimonial assets and jointly acquired liabilities is 50:50. But how can something as intangible as rewards points be shared on divorce? The court is likely to look towards how the points are monetised, and what value can be attributed to them.
For example, in an HSBC scheme, for every £5 spent, 1 point is accrued, with 100 points equalling £1. For ease of simplicity, the court may use this formula, or similar depending on the provider, to calculate the total value of the points available. The court will not be able to divide the points and transfer them onto another credit card, but it could offset one spouse’s share against another matrimonial asset. This means that the spouse without points would receive a greater share of an agreed resource as compensation.
Alternatively, if there is a liability owed on the account, the parties could reach an agreement whereby the account holder retains the points, but the monetary value is offset against the jointly acquired debt instead. The benefit of this is that the other assets remain intact and can be distributed accordingly.
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