What Happens If I Add a User to My Credit Card?

Adding a user to a credit card account can be a way to manage finances or assist family members. This arrangement offers convenience and a pathway for others to engage with credit, but it involves specific considerations for all parties.

What Adding a User Means

An authorized user is an individual granted permission to use a primary cardholder’s credit card account. They can make purchases with a card issued in their name but do not own the account. The primary cardholder retains sole legal responsibility for all charges made on the account, regardless of who made them. Authorized users typically cannot make changes to the account, such as increasing the credit limit or closing it.

This arrangement differs significantly from a joint account, where all account holders share equal ownership and are equally liable for the debt. Joint accounts are less common, and unlike authorized users, joint account holders typically undergo a credit check during application. An authorized user is generally not subject to the same credit checks or income requirements as a primary cardholder.

Steps to Add an Authorized User

Adding an authorized user typically involves contacting the credit card issuer directly. This process can often be completed online, through a mobile app, or by phone.

To add an authorized user, the primary cardholder provides identifying information for the individual, including their full name, date of birth, and address. Some issuers may also request the authorized user’s Social Security number. Once the request is processed, a new card bearing the authorized user’s name is typically mailed to the primary cardholder’s address.

Impact on Credit and Liability

Adding an authorized user carries distinct financial and credit implications for both the primary cardholder and the authorized user. The primary cardholder remains fully liable for all charges made on the account, including those incurred by the authorized user. Any spending by an authorized user, if not repaid to the primary cardholder, becomes the primary cardholder’s debt.

For the primary cardholder, responsible use by an authorized user can contribute to a positive credit history. Increased spending can elevate the credit utilization ratio, which might negatively affect the primary cardholder’s credit score. If the account experiences missed payments, the primary cardholder’s credit score can suffer significantly. Payment history is a major factor in credit scoring models.

For the authorized user, this arrangement can establish or improve their credit history, particularly if they have limited or no credit. The account’s payment history and credit limit may appear on the authorized user’s credit report, potentially boosting their credit score if the primary account is well-managed with on-time payments and low credit utilization. Not all credit card issuers report authorized user activity to all three major credit bureaus, so the impact on the authorized user’s credit may vary. Authorized users are generally not legally responsible for the debt incurred on the account.

Managing an Authorized User

Once an individual is added as an authorized user, the primary cardholder maintains oversight of the account. Monitoring account activity is a practical step, and many credit card issuers provide online portals or mobile apps to track transactions.

Some credit card issuers offer the ability to set specific spending limits for authorized users, though this feature is less common for personal credit cards. If an issuer does not offer hard spending limits, the primary cardholder can discuss spending guidelines with the authorized user and receive transaction alerts. Removing an authorized user is typically a straightforward process, usually accomplished by contacting the credit card issuer by phone or through an online account portal. The primary cardholder can initiate this removal at any time.