Is an Authorized User on a Credit Card Liable?

An authorized user on a credit card is an individual granted permission to use another person’s credit card account. This arrangement allows the authorized user to make purchases with a card issued in their name. The primary account holder retains ultimate responsibility for the account. This role helps clarify financial obligations and credit implications, especially for those seeking to build or manage credit without direct financial liability.

The Role of an Authorized User

An authorized user can use a credit card linked to the primary account holder’s credit line. This typically involves receiving a physical card with their name on it, enabling them to make purchases. Authorized users can often review their transaction history and may even be able to make payments to the account, depending on the card issuer’s policies.

An authorized user’s access is limited and derived from the primary account holder. They generally cannot perform actions such as changing account terms, requesting a credit limit increase, adding other authorized users, or closing the account. An authorized user also typically cannot access the primary account holder’s full account statements or redeem rewards unless specifically granted permission by the primary cardholder and the issuer. The primary account holder maintains full control and can remove an authorized user at any time.

Financial Responsibility for Debt

An authorized user is generally not legally responsible for any debt incurred on the credit card account. This is because the primary account holder applied for the credit card, signed the credit agreement with the issuer, and contractually agreed to repay all balances.

The credit card company typically pursues the primary account holder for payment, regardless of who made the charges on the card. If an authorized user makes purchases and the bill goes unpaid, the legal obligation to settle that debt rests solely with the primary cardholder. Even in situations where the primary account holder experiences financial distress, such as bankruptcy, the authorized user is not legally obligated to assume that debt.

Credit History Implications

Being an authorized user can significantly impact an individual’s credit report and score. When a card issuer reports account activity to the major credit bureaus—Equifax, Experian, and TransUnion—the account’s payment history and credit utilization typically appear on the authorized user’s credit report, in addition to the primary account holder’s. This reporting can be beneficial if the primary account holder manages the account responsibly by making on-time payments and maintaining a low credit utilization ratio. Positive payment history, in particular, can help an authorized user build or improve their credit score, especially for those new to credit.

Conversely, negative activity on the account can also affect the authorized user’s credit. If the primary account holder makes late payments or carries a high balance that leads to high credit utilization, these negative marks can appear on the authorized user’s credit report and potentially lower their credit score. While an authorized user is not financially liable for the debt, their credit profile is still linked to the primary account holder’s financial behavior on that specific account. It is important to confirm with the card issuer whether they report authorized user activity to all three credit bureaus, as this reporting is not universal.

Authorized User Versus Joint Account Holder

Distinguishing between an authorized user and a joint account holder is important due to their vastly different legal and financial responsibilities. An authorized user can use the account but is not legally responsible for the debt. In contrast, a joint account holder shares equal and legal responsibility for the entire debt on the account.

When opening a joint account, both individuals typically apply together and sign the credit agreement, making them equally liable for all charges, regardless of who made them. This means that if one joint account holder defaults on payments, the other is fully responsible for the outstanding balance. Joint accounts also impact both account holders’ credit reports equally, with positive or negative activity affecting both individuals directly. Joint credit card accounts are also less common than authorized user arrangements, as many credit card issuers do not offer them.