What Happens to Credit Card Rewards in Divorce?

For many people going through a #divorce, credit card #debt is one thing they often have to worry about. While it is fairly straightforward to allocate such debt among the spouses, it is important to note that no matter what your divorce decree says about who is supposed to pay, the credit card companies are not obligated to follow that decree.

A quick primer: The credit card companies don’t care who pays, as long as they get their money. So if your ex took the debt, but skips the payments, the company is coming after you. Your choice is to make the payments or have bad credit. And the only way to get the money back after that is to take your ex back to family court.

But enough about credit card debt.

What about the perks that come along with some credit cards? Many couples are able to rack up significant balances in reward programs, like millions of airline miles or reward points. These are often-overlooked assets in the divorce. While some couples can agree on who gets this asset, others cannot. Some go through the entire process without even considering this potential asset.

In some cases, the terms of the card will dictate the distribution. Many reward programs stipulate that the value cannot be transferred to another party, even in a divorce. In these cases, the value goes to the primary account holder. If the spouses want to fight over this “asset” the reward may have to be valued for purposes of total asset distribution. This is not usually easy and will often require professional assistance, a costly endeavor.

The bottom line is that you should not overlook credit card reward programs in your divorce. While the value may seem insignificant, it can become a key part of divorce negotiations if the stakes are high enough.

To learn more about how a Divorce Transitional Support Advisor can help you or your client regain financial stability after a divorce, please visit our website.