Many credit cards offer users “points” as a method of rewards currency. These points can be earned when you use the line of credit for spending. But what will happen to the credit card points you have accrued if you go through a divorce?
Even the most amicable divorce is an emotionally and logistically difficult process. Because of this, it is critical to understand what happens to various types of assets as a result of a divorce, including credit card points.
Credit Card Points as Assets
Because they represent value, credit card points are considered to be a type of property. These points may be marital property, separate property, or a combination of the two.
If the credit card points were accumulated during the marriage, they are likely to be classified as marital property. When this is the case, the points may be subject to a division between the separating spouses.
But suppose the points were earned before you were married or after you had separated. In either of these cases, they may be considered separate property. Separate property is typically not subject to being divided in the divorce.
Dividing Credit Card Points as Marital Property
When credit card points are considered marital property, they may be included in the division of property. The division of assets is usually detailed in the divorce settlement paperwork.
This division of assets can be negotiated by both spouses, when possible. Depending on the circumstances of the divorce, the division of property may be determined by a judge.
If a judge decides on the matter, they will take a wide range of factors into account. These factors can include:
- The length of the marriage
- The earning potential of each individual spouse
- The contribution of each spouse to the marital assets
The court will also consider other factors that are specific to the credit card points in question. For instance, the judge will need to determine the monetary value of the points. This can be difficult because, depending on how they are used, credit card points may be valued differently.
A credit card point may be worth more if it is used to purchase an airline flight than if it is redeemed to purchase a consumer product. As a result, the court will likely consider the method of redemption to be used for the points.
The presiding judge will also consider the ownership of the line of credit. If the credit card is jointly held, it may be easier to determine a fair division of the points.
But if the account is only registered to one of the spouses, it may be a point of contention. Fairly allocating credit card points in cases like this will be up to the discretion of the judge.
Additionally, distributing or sharing the points may be impractical so a monetary offset or buyout may be necessary to effectuate a distribution.
Other Considerations During a Divorce
Credit card points are only one type of asset to consider when you are planning a division of assets from a divorce. Other common types of assets are:
- Real estate
- Retirement account contributions
- Personal property
It is critical to speak with an experienced family law attorney to ensure that you secure a fair settlement and keep your assets safe. If you are concerned about your credit card points, you may want to transfer them to another account before the divorce is finalized.
Keep in mind that this may have important tax implications, which your attorney can advise you of.
A Family Law Attorney Can Protect Your Assets
When you need dedicated legal representation from a family law attorney in Garden City, New York, turn to the skilled team at Aiello & DiFalco LLP. We are committed to helping families through critical transitions with the legal knowledge and personal attention you need to protect both your assets and your family’s future.