Usually, when discussing credit cards and divorce, we think of who must pay the debt on a given card. But credit cards also have a variety of rewards programs that can be rather lucrative to some users – points in a rewards program for frequent flyers, for example, may be worth thousands of dollars in free flights. Who gets the rewards in the event of a divorce?
Rewards programs are no different in the eyes of the law than any other property. If the rewards were accumulated during the marriage, the rewards are considered marital property, regardless of whose name is on the card.
If a spouse wants to overcome the presumption that the rewards should be marital property, that spouse would have to show that he or she earned the points prior to marriage or as an exclusive benefit through employment. For some spouses, this may be an impossible task.
If spouses must divide the rewards, what do they do? As set out in this article, most rewards programs charge a fee for transferring points. Given the fee, it may not be worth dividing the points in this manner, and spouses may seek to offset the loss in the rewards program with another marital asset.
In deciding how to handle rewards points during a divorce, you should first determine how much is at stake. If the value is minimal, it would not be worth litigating. If it is very significant, it is worth including in the property settlement and may be leveraged to get a certain asset the spouse desires.
Do not assume that points on a card belong to the spouse with the card – you may be giving up a large sum of marital property.
If you have questions about credit card rewards and divorce, contact us – we can help.