I’ve worked with many divorcing or separating couples who haven’t considered what to do with their credit card bonus points or rewards. Such points or rewards can be immensely valuable especially when you consider that most consumers prefer to use credit nowadays as opposed to cash. Generally, keep in mind that these points or rewards equal money which means you should either be dividing them equitably or negotiating for some other asset of equal value.
Determining who the rewards belong to can be a task in itself. Many people erroneously believe that if the card is in their name alone then the rewards belong to them solely and such asset is not part of the marital estate. This is incorrect. It is usually irrelevant whether the account is jointly in both names or one party individually. In fact, the sole fact that the rewards were earned during the marriage, regardless of who earned them, is enough to make them a marital asset. One exception to this general rule is if the card is a business (not personal) card. Another exception would be if you open the account prior to marriage and earned the points prior to marriage (or any portion of the total balance) then that amount or portion would be considered non-marital and not subject to division.
After determining that points are marital, it can be an arduous task deciding what to do with them. Some companies will not allow their customers to transfer points. This means you will have to get educated about what your credit card company will and won’t allow when considering your property division. If your company won’t allow a transfer or a hefty fee is assessed for such division, divorce is typically no exception or loophole. Therefore, you may have to assign a value to the rewards. For instance, if your airline credit card allows you to use 100,000 points to purchase a ticket worth $1,000 then you know your points are worth 1 cent each. One of you should keep the 100,000 points and the other should receive an asset or credit in the equivalent amount of $1,000. Some rewards programs offer standard cashback benefits. This means you can trade in points for a simple cash redemption. This yields an easy cash split between spouses. You might also have the option of opening your own account if you currently share a joint account. You would then be able to divide the rewards you and your spouse have accrued. The new account will need to be opened through the same issuer and using the same rewards program. This might be a relatively simple solution.
At McGill Law, we can help you come up with creative solutions regarding what you should do with your rewards. It doesn’t make financial sense to argue over how to split up your points – let us help you find a reasonable division that makes sense for you and your family.
Give us a call today, we have your back!