What Is an Authorized User on a Bank Account?

An authorized user on a bank account is an individual granted specific access to an account by the primary account holder. This arrangement allows for convenience and support in financial management without transferring ownership of the funds.

Understanding the Authorized User Role

An authorized user is permitted to conduct transactions on a bank account, such as making deposits or withdrawals, without holding legal ownership of the funds. They can use a debit card linked to the account and, if provided, write checks. This access is granted by the primary account holder, who retains full control and ownership of the funds.

Authorized users cannot close the account, change its terms, or make fundamental decisions about its ownership. They are not held liable for any overdrafts or fees incurred on the account. This role differs from an authorized user on a credit card, as it generally has no impact on one’s credit score.

Comparing Bank Account Roles

The authorized user role differs from other bank account classifications concerning ownership, liability, and control. A primary account holder legally owns the funds, has full control over the account, and is solely responsible for all activities, including any overdrafts or fees. They can open, close, and modify the account as they see fit.

A joint account holder, by contrast, shares equal ownership of the funds with other joint holders and has full access and rights to the account. Joint account holders are equally responsible for all account activities, including any debts or fees. Unlike authorized users, joint account holders have the authority to make fundamental decisions about the account, such as closing it.

Adding an Authorized User to an Account

Adding an authorized user to a bank account typically involves the primary account holder contacting their financial institution. This process often requires both the primary account holder and the prospective authorized user to provide specific personal information, including full legal names, addresses, dates of birth, and Social Security Numbers.

Banks generally require a valid government-issued identification from both parties for verification. The process can often be initiated in person at a branch, through online banking platforms, or by contacting customer service via phone. Some banks may also require signatures from both the primary account holder and the authorized user to formalize the arrangement.

Removing an Authorized User from an Account

The primary account holder can remove an authorized user from an account at any time. This process typically involves contacting the bank, either in person, online, or by phone. The primary account holder will need to provide specific information to verify their identity and authorize the removal.

Upon removal, the authorized user’s access to the account is immediately revoked. Any debit cards or checks associated with their access become invalid. An authorized user cannot remove themselves or another authorized user from the account; this action rests solely with the primary account holder.

Key Considerations for Account Holders

Primary account holders bear full responsibility for all activities on the account, including transactions initiated by an authorized user. It is important for primary account holders to establish a high level of trust with any authorized user and maintain open communication regarding account usage. Regularly monitoring account activity is also advisable to ensure transactions align with expectations and to detect any unauthorized use promptly.

For authorized users, understanding that they do not own the funds in the account is important. While their actions can affect the primary account holder, they are typically not legally responsible for negative balances or overdrafts.