There are so many types of property that may become eligible for division in a divorce settlement that it is easy to overlook something. Some couples do not think much about the reward points they earn on their credit cards. However, a couple should consider paying attention to card rewards since they can be valuable.
Some couples reap hundreds or possibly thousands of dollars in rewards points from using credit cards for hotel stays, taking air flights, for material purchases, or buying meals. Nerdwallet explains what might happen in the event a divorcing couple wants to divide up card points and rewards.
The possibility of keeping rewards
In some cases, one spouse may keep all of the rewards earned on a card, but it depends on the circumstances. It is possible to hold on to all reward points earned before getting married. After getting married, any rewards acquired from that point forward may be subject to division because a court may consider them marital property even if the card remains solely in one spouse’s name.
One way to possibly safeguard reward points earned during marriage is to use a prenuptial agreement. Spouses may specify that rewards earned on their own cards during their marriage remain separate property. It is still possible, however, that a court may rule otherwise.
The challenges of dividing points
Dividing card points and rewards between spouses may be difficult. The problem generally lies in the terms and conditions of the card programs. Some card companies allow a cardholder to transfer points to another card free of charge. However, other card companies forbid transferring rewards unless the cardholder pays a fee. Some reward programs require a spouse to provide divorce documents before transferring rewards.
Deciding whether or not to divide rewards
The complexity of dividing credit card rewards might be too troublesome. Some couples find their rewards are not worth much. Even if they are, sometimes a spouse will try to make things easier by trading his or her share of the rewards in exchange for an asset of equal value. According to CNBC, another option is to redeem the rewards prior to completing a divorce. This may help if a couple wants to close out a jointly owned card and divide the debt equally.
It is important to keep a cool head about dividing card rewards. Divorcing couples may work through their options to find out whether or not it is worth it to split up their credit card points.