Table Of Content
What Is An Authorized User On A Credit Card?
An authorized user on a credit card is a person who is authorized by the primary cardholder to use their credit card account. They are given a card with their own name on it and can make purchases, but are not legally responsible for paying off the balance.
The authorized user can use the card for making purchase but do not own the account, the credit history and the payment responsibility lies with the primary cardholder.
How Does It Work?
When someone is added as an authorized user to a credit card account, the primary cardholder is responsible for making sure that the account is in good standing and that payments are made on time. The authorized user will be issued a card with their own name on it that they can use to make purchases.
However, the credit history for the account will only reflect the primary cardholder's credit history and the authorized user's credit history will not be affected by the account unless it's a joint account. The primary cardholder will also be responsible for paying off the balance for any purchases made by the authorized user.
When an authorized user makes a purchase, the transaction will show up on the account's statement, and the primary cardholder will be responsible for paying it off. And the authorized user can also see the statement and transactions on it.
Benefits Of Authorized Users
Adding an authorized user on a credit card can bring many advantages for both the primary cardholder and the authorized user, such as building credit history, providing financial assistance in case of emergencies, offering convenience, earning rewards and allowing the primary cardholder to monitor the spending.
Let's get into how this benefits users:
When an authorized user is added to a credit card account, they may benefit from the account's positive payment history.
Adding an authorized user to your credit card account can provide peace of mind for unexpected expenses or emergencies.
Authorized users can make purchases with the card, which can be useful in situations where the primary cardholder is unable to do so.
Some credit card rewards programs allow rewards to be earned when an authorized user makes purchases with the card.
Some institutions allow the authorized user and the primary cardholder to be jointly liable for the credit card account and they both will have the credit history in their credit report
As the primary cardholder will have the access to the statements, they can monitor the spending by the authorized user and also can set the spending limits on it.
What Can An Authorized User Do On A Credit Card?
An authorized user on a credit card can do the following:
- Make purchases: The authorized user will be issued a card with their name on it that they can use to make purchases.
- View account information: Authorized users can typically view account information, including the account balance, transactions, and statements,
- Earn rewards: If the credit card has a rewards program, the authorized user may be able to earn rewards when they make purchases with the card.
- Use additional services: Some credit card issuer also provide additional services such as card protection, concierge services, or travel accident insurance for authorized user.
It's important to note that the authorized user does not have the same rights and responsibilities as the primary cardholder. The authorized user is not legally responsible for paying off the balance on the account and cannot make changes to the account without the primary cardholder's permission.
How Many Authorized Users Can Be On A Credit Card?
The number of authorized users that can be added to a credit card account can vary depending on the issuer and the type of card. Some credit card issuers may place limits on the number of authorized users that can be added to an account, while others may not.
For example, some credit card issuers may allow only one or two authorized users per account, while others may allow up to five or more.
It's recommended to check with the credit card issuer for their specific policy on adding authorized users to an account as the limit for this varies for different credit card issuer and it also depends on their agreement.
What Are The Fees For Adding Authorized Users?
Adding authorized users costs a fee on a few credit cards, while you can do it for free on most of them.
Here are the fees for some of the best travel cards:
Authorized User Annual Fee
$175 for up to 3 additional Platinum cards, then $175 per additional Platinum card (see rates & fees)
Free for the first 5 people
Free for up to the first 10 users
Being An Authorized User: What Does It Mean?
Being an authorized user on a credit card means that the primary cardholder has granted you permission to use their credit card account. You will typically be issued a card with your name on it that you can use to make purchases. However, it is important to understand the responsibilities and limitations that come with this status.
- You are not legally responsible for the debt: As an authorized user, you are not responsible for paying off the balance on the account. This means that you will not be held liable for any unpaid debts if the primary cardholder fails to make payments.
- Limited impact on your credit score: Being an authorized user can affect your credit score, but the impact is typically limited to joint account. If the primary cardholder keeps the account in good standing with on-time payments and a low balance, it can have a positive impact on your credit score. However, if the primary cardholder misses payments or the account goes into default, it can have a negative impact on your credit score.
In summary, being an authorized user on a credit card account can be beneficial in certain situations, but it's important to be aware of the potential risks and to make an informed decision.
It's important to regularly monitor the account activity and to keep open lines of communication with the primary cardholder to avoid any unwanted surprise.
How Much Will My Credit Score Go Up If I Become An Authorized User?
The impact that being an authorized user on a credit card account will have on your credit score can vary depending on the specific circumstances.
If the primary cardholder has a positive credit history and pays their bills on time, being an authorized user on their account could potentially help improve your credit score. This is because the account's positive payment history and low credit utilization will be reported to the credit bureaus and will be factored into your credit score.
However, it's important to note that credit score is a complex computation and many other factors also play a role in determining your credit score. And being an authorized user will not increase your credit score as much as if you had your own credit account. And being an authorized user on an account that has missed payments or high credit utilization can have a negative impact on your credit score.
It's difficult to predict exactly how much your credit score will go up as an authorized user because it depends on many factors such as the primary cardholder's credit history, payment behavior, credit utilization, your credit history and the credit scoring model used.
How To Add Or Become An Authorized User
Becoming an authorized user on a credit card account or adding someone as an authorized user to your account is a relatively straightforward process. Here are the steps to follow:
1. Contact The Credit Card Issuer
Contact the credit card issuer to inquire about adding an authorized user to the account. They will typically have a form or application you'll need to fill out.
For example, let's say Sarah wants to add her son, David, as an authorized user on her credit card account. She will call the credit card issuer and inquire about adding an authorized user to her account.
2. Provide The Necessary Information
When applying to become an authorized user, you will be asked to provide personal information such as your name, address, and Social Security Number.
For example, the issuer will provide Sarah with the application form and ask for David's personal information such as name, address, and Social Security Number.
3. Agree To The Terms And Conditions
Once the application is submitted, the primary cardholder and the authorized user may be required to agree to the terms and conditions of the account, such as credit card agreement.
4. Receive The Card
Once the application is approved, a card with the authorized user's name will be sent to them, which they can start using to make purchases.
For example, once the application is approved, the issuer will send David his own card with his name.
Tips When Adding Or Becoming An Authorized User
It's important to remember that being an authorized user on someone else's credit card account can affect your credit score both positively and negatively depending on the account activity and payment history.
It's essential to have a clear understanding of the responsibilities and the agreement of being an authorized user before adding or becoming an authorized user on a credit card account:
- Consider the primary cardholder's creditworthiness: As mentioned earlier, being an authorized user means your credit limit will be linked to the primary cardholder's credit limit, so it's important to consider the primary cardholder's creditworthiness before applying.
- Communicate with the primary cardholder: Make sure to keep in touch with the primary cardholder to make sure they are aware of the account activity and if there are any issues.
- Monitor the account activity: Regularly check the account statement and transactions to ensure that there are no fraudulent charges.
- Cancel the card if not needed: If you are no longer using the card or the primary cardholder is not keeping the account in good standing, it's a good idea to cancel the card to avoid negatively impacting your credit score.
How To Remove An Authorized User?
Removing an authorized user from a credit card account is a relatively simple process. Here are the general steps you'll need to follow:
- Contact the credit card issuer: Contact the credit card issuer and inform them that you would like to remove an authorized user from the account. They will typically have a form or application that you'll need to fill out.
- Provide the necessary information: The issuer will ask for personal information of the authorized user you want to remove such as their name and account number.
- Confirm the removal: The issuer will confirm the removal of the authorized user and will cancel the card issued to that user.
- Update the account: After the removal of the authorized user, you should check the account statement and monitor the account activity to ensure the authorized user's card is not being used.
It's important to note that depending on the credit card issuer, there might be different steps or timeframes to remove an authorized user. You should check with your issuer for specific details on their policies on removing authorized users.
It is also worth noting that removing an authorized user will not remove their name or activity from the account history.
Authorized User On Credit Card After Death
When the primary cardholder on a credit card account dies, the account will typically be closed, and any outstanding balances will need to be paid by the estate or by the named beneficiaries on the account. The authorized user's rights to use the card will usually be terminated at that point.
However, the exact process of closing an account and the rights of authorized users after the primary cardholder's death can vary depending on the credit card issuer and the terms of the account.
It's important to note that the authorized user's rights to use the card will typically be terminated when the primary cardholder dies, and they won't have access to the account, unless it is a joint account.
If it's a joint account then the authorized user may be able to maintain the account and the responsibility of making payments may fall on them.
Joint Credit Card vs. Authorized User: What's The Difference?
A joint credit card and an authorized user credit card have some similarities but also significant differences.
A joint credit card account is a credit card account that is held by two or more individuals, with each person being jointly responsible for the debt. Both individuals have equal access to the account and both will have the credit card activity reported on their credit reports.
Here are the main differences between joint credit cards and authorized user credit cards:
- Legal responsibility for the debt: With a joint credit card account, both individuals are jointly responsible for the debt. With an authorized user credit card account, the primary cardholder is responsible for the debt.
- Credit report: The credit history from a joint credit card account will appear on both individuals' credit reports. However, with an authorized user credit card, the credit history will only appear on the primary cardholder's credit report, unless it's a joint account.
- Access to account: Both individuals on a joint credit card account have equal access to the account and can make charges. An authorized user, however, is typically only allowed to make charges and doesn't have the same level of control over the account.
- Application: joint credit card application needs the credit report of both applicants to be checked and the approval process may vary based on the credit report and other factors. While an authorized user is added to an existing account and the process is much simpler.
In summary, Joint credit card and Authorized user credit card are similar in the sense that they both allow multiple people to use a single account