What Is an Add-On Credit Card and How Does It Work?
Understand add-on credit cards (authorized user cards): how they function, their credit implications, and practical management.
An add-on credit card commonly refers to an authorized user card, which allows an individual to use the credit line of another person’s existing credit card account. The authorized user receives a physical card linked to the primary account for purchases. The primary cardholder maintains ownership and control over the account, extending privileges to the authorized user. This allows sharing access to a credit line without opening a new account.
Understanding Authorized User Cards
An authorized user card involves two distinct roles: the primary cardholder and the authorized user. The primary cardholder is the individual who originally applied for and owns the credit card account, bearing full legal responsibility for all charges incurred on it. The authorized user, conversely, is granted permission to use the credit line but does not own the account or assume any legal liability for the debt.
The physical card issued to an authorized user typically bears their name, clearly indicating their designation as an authorized user, though it is still tied to the primary cardholder’s account. An authorized user cannot make changes to the account, such as requesting a credit limit increase, changing billing addresses, or closing the account. Their permissions are limited solely to making purchases and potentially viewing account activity, depending on the issuer’s online access policies.
Implications for Credit Reporting
Authorized user accounts generally appear on the credit reports of both the primary cardholder and the authorized user. The complete account history, including payment activity, credit limit, and current balance, is typically reported to the major credit bureaus.
For the authorized user, positive payment history and responsible account management by the primary cardholder can be beneficial. A well-managed account with low utilization and on-time payments can contribute positively to the authorized user’s credit profile, helping them establish or improve their credit score. Conversely, negative activity on the primary account, such as late payments, high credit utilization, or defaults, can adversely affect both the primary cardholder’s and the authorized user’s credit scores. The extent of this impact depends on the specific reporting practices of the credit card issuer and the overall health of the primary account.
Establishing and Managing the Account
To add an authorized user, the primary cardholder typically contacts their credit card issuer directly, either online, by phone, or through a mobile application. They provide personal information for the authorized user, including full name, date of birth, and sometimes a Social Security Number. After processing, a new physical card is usually issued and mailed, either to the primary cardholder’s address or directly to the authorized user, depending on the issuer’s policy.
Effective management requires clear communication between the primary cardholder and the authorized user. Discussions should cover spending limits, usage expectations, and repayment arrangements if the authorized user is expected to contribute. Some credit card issuers offer features that allow the primary cardholder to set specific spending limits for each authorized user. The primary cardholder can remove an authorized user by contacting the credit card issuer, deactivating the authorized user’s card and ceasing their access to the credit line.