Everything you need to know about authorized users

The decision to add an authorised user to your credit card account should not be taken lightly. When you authorise a person to charge your account, you are responsible for paying for their purchases with the card linked to it. Everything you need to know

Becoming an authorised user comes with many great benefits, including building a credit history and boosting your rewards. And for every dollar that your authorised user is spending, you can earn points, cash back or miles.

But, despite the benefits, there are some serious consequences to consider when you add an authorised user. Read on for everything you need to know to make informed decisions about adding authorised users to your credit card accounts. Everything you need to know

What’s an authorised user?

An authorised user is someone who has been given formal permission by a cardholder to use their credit card and has been added to the account. Everything you need to know

“For instance, a spouse can be an authorised user on your card, as well as some other close family member, such as a teenage or college-aged child,” said Monica Eaton-Cardone, COO and co-founder of Chargebacks911.

Once added to an account, authorised users get their own card issued to them with their name on it. All purchases made on either your card or an authorized user’s card then are charged to, paid on and earn rewards on the same account. The primary cardholder is responsible for the debts on all cards issued on that account. Read more about the minimum age for an authorised user. Everything you need to know

Considerations for adding or becoming an authorized user

So, what’s the benefit of adding an authorised user to one of your credit card accounts – or becoming an authorized user on someone else’s account?

The most common reason to add an authorised user to your account is to enable that designated person to use the credit card to make purchases linked to your account. Everything you need to know

“Your spouse, for instance, may need to use your card from time to time, so adding them as an authorised user allows for this,” Eaton-Cardone said.

It can also help your authorised user’s credit history by adding positive data to their credit report.

For people who want to establish credit history and in turn boost their credit score, opening a credit card account is a good step toward achieving these goals. Becoming an authorised user is an easier way to do this than opening your own accounts because you won’t have to qualify based on your own credit history. Anyone can be listed as an authorised user. Everything you need to know

Once you’re on the account, the payment history exhibited by the primary cardholder is reported to the three credit bureaus.

How to add an authorized user

To add an authorised user, contact the bank that issued your card, either via its customer service phone number or online platform. Have important details on hand for the authorised user, including their legal name, date of birth, and social security number. Overall, it’s a relatively quick and simple process, Eaton-Cardone said. Everything you need to know

Be aware that there could be fees associated with adding an authorised user to your account.

How to remove an authorized user

The process of removing an authorised user is largely the same as adding one. You can contact your issuer and request to remove the individual from your account.

“Be aware, though, that while removing a user won’t impact your credit, it will negatively impact the credit of the person you remove from the account,” Eaton-Cardone warns. “That person won’t have your credit available to calculate as part of their credit utilization ratio, which makes up about 30% of their credit score.” Everything you need to know

Understand the risks

Although there are several great reasons to add an authorised user to your account, there are some potential downsides that you should know beforehand.

Their debts will be your debts

When you add an authorised user, you’re allowing them to use your credit. If they are irresponsible, it could negatively impact your credit and cost you money down the line, said Eaton-Cardone.

“You could end up with a higher credit utilization ratio, as well as a large bill for which you’re ultimately responsible,” she explained. Everything you need to know

It’s important to have a clear discussion with your authorised user before handing over the card.

“The key here is responsibility. Before adding an authorised user to your account, you should establish ground rules for when you expect that person to use the card and how much they may charge,” Eaton-Cardone said.

Otherwise, you could rack up a revolving debt, which will cost you interest, as well as use up more of your available credit, she said. Everything you need to know

Relationships may be strained

Another negative aspect of adding an authorised user is how it can impact your relationship with your family member.

“Sometimes, primary cardholders expect the authorised user to pay for the charges they made to the account,” said Karra Kingston, a bankruptcy attorney with offices in New Jersey and New York. Everything you need to know

Although the cardholder and the authorised user might have made a repayment agreement, this doesn’t change the primary account holder’s responsibility.

“If the authorised user doesn’t pay the charges they made, the primary account holder will still need to make the payments,” Kingston said. “If an authorised user fails to pay for the charges they have been putting on the card, this can cause a strain in the relationship.” Everything you need to know

Cash advances and cheques can be requested

Kingston said most cards don’t set limitations on how much an authorised user can spend or request on an account.

“Authorised users can take cash advances out just like the primary cardholder, and an authorised user can call up and request the cheques with the primary account holder’s name,” she cautioned. “An authorised user is allowed to take whatever the primary holder’s cash advance limit is.” Everything you need to know

Allowing authorised users to take cash advances on a credit card can pose dangers.

“Cash advances typically have higher interest rates and don’t usually provide any grace period to pay back interest on purchases,” Kingston said. If the authorised user takes out cash advances and doesn’t pay them back, it can severely impact the primary cardholder’s credit score. Everything you need to know

Benefits of adding an authorized user

There are many perks that could sway you to add an authorised user to your account. Whether it’s helping your child build a credit history or racking up more rewards, adding an authorised user can offer many benefits. Everything you need to know

Build credit history

Adding a child or family member to your account to help build their credit is a common goal. “Even if your children never use your card, simply having them as authorised users on the account establishes credit history,” said Eaton-Cardone. This allows them to start building credit at an early age – assuming your account remains in good standing. Everything you need to know

Track spending

Another benefit is this arrangement provides a way to track the spending habits of your authorised users. By using your online account or the issuer’s app, you can see what your authorised user is purchasing (helpful if you want to monitor your teenager’s spending, for instance). Everything you need to know

Maximize rewards

Reaping the rewards of your authorised user’s spending is a big reason you might add them to your account. “This is most useful with travel cards, especially luxury cards with generous perks and benefits,” said Steven Dashiell, credit card expert at Finder.com. Everything you need to know

With every purchase, your authorised user earns rewards—points, cash back, or miles on your credit card account. Everything you need to know

Enjoy perks

In many cases, Dashiell said, an authorised user can “double-dip” on a card’s perks and benefits. “That means an authorised user might also gain access to eligible airport lounges, discounts for using the card, or, in some cases, their own separate statement credits for certain perks,” Dashiell added. The scope of an authorised user’s access can vary depending on the card and issuer, so it’s important to thoroughly review the card’s terms and conditions to understand all the details. Everything you need to know