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These days, most credit card issuers don’t allow people to own a card account jointly, even with a spouse. So if you want to share your account with a family member, adding them as an authorized user is usually the way to do it.
An authorized user receives their own card that’s linked to your account, and they can use it to make purchases and access the card’s perks. But as the primary cardholder, you are on the hook for paying the bills.
Before you add someone to your card, it’s worth weighing the benefits, potential risks and a few practical rules that can help prevent surprises.
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Benefits of adding an authorized user
Adding your spouse or child as an authorized user can have numerous benefits, as long as they manage their card responsibly. With a rewards credit card account, you can rack up extra cash back, points or miles if more than one person makes purchases with it.
Plus, keeping track of your family’s spending may be easier. And especially for a teen or young adult, being an authorized user is a solid avenue to building a positive credit history.
Important details to check before adding an authorized user
When you add a user to your account, you’ll need to provide your card issuer with identifying information such as their Social Security number and date of birth, but they won’t have to share their income or undergo a credit check.
Usually, anyone — even if they’re not a family member — can become an authorized user as long as they meet any age requirements; with some issuers, authorized users must meet an age minimum, ranging from 13 to 18.
Although you can add a user for free on many cards, you should ask about fees, especially with a premium card, says credit expert Gerri Detweiler. With the Chase Sapphire Reserve card, for example, the standard annual fee is $795, and you must pay an extra $195 per year for each authorized user.
Also, find out whether the user has access to all of the card’s benefits, such as statement credits for certain purchases, or a limited selection.
Check whether your card issuer reports authorized-user accounts to the major credit-reporting companies (Equifax, Experian and TransUnion); most do. Both you and the user benefit from account activity that contributes to a positive credit history, including on-time bill payments.
But any detrimental moves affect both of you, too. If, for example, your card balance rises higher than its typical level when the user starts spending on the card, your account’s utilization ratio (the percentage of available credit you use) may increase, too — and that can hurt your credit score. Generally, the lower your credit-utilization ratio, the better.
Detweiler recommends that you ask your issuer for a higher credit limit if you think the authorized user’s spending could raise your credit-utilization ratio. But you’ll need to make arrangements with the user to ensure that their spending stays within the bounds of your budget.
If they rack up a high balance and you fall behind on your credit card payments, both of your credit scores could suffer serious damage. And even if you pay the bills on time, you’ll owe interest on the remaining amount if you don’t pay the balance in full each month.
Managing your authorized user account
You may want to set clear spending limits upfront or review statements together each month so there are no surprises. To keep track of the user’s account activity, sign up to get alerts from your card issuer of new transactions or changes in your card’s balance.
Depending on your relationship with the user, you may want to set up a plan for them to pay you for their charges each month; this could work well with, say, an adult child.
If the arrangement stops working or creates financial strain, you can usually remove an authorized user quickly through your card issuer’s app or customer service line. With the right guardrails in place, sharing a card can be a useful financial tool rather than a source of stress.
Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.
