Adding a loved one, such as a partner, child, family member, or friend, as an authorized user on a credit card can have multiple advantages. This article will explore the benefits of adding an authorized user and the risks associated with it.
Firstly, adding an authorized user can simplify your financial management. Instead of using multiple cards and dealing with separate bills or settling expenses later, you can divide the costs between two individuals or pay from a shared account, depending on your circumstances. This can make tracking expenses and budgeting easier, especially for joint expenses like household bills or family vacations.
Additionally, the primary cardholder will receive all the points, which can be beneficial if the authorized user is not concerned about earning points. For example, if the primary cardholder has a travel rewards credit card, they can accumulate points faster by using the authorized user’s spending as well. This can result in more significant rewards and benefits, such as free flights, hotel stays, or cashback.
Moreover, authorized users on select cards can enjoy additional perks. Some credit cards offer exclusive benefits to authorized users, such as access to airport lounges, complimentary travel insurance, or concierge services. These perks can enhance the authorized user’s travel experience and provide added value for being added to the card.
Beyond just simplifying expenses, there are some lesser-known benefits to adding authorized users to your credit cards. In most cases, authorized users are still eligible for the card’s welcome offer if they apply for their own card. So, if you add your partner as an authorized user on your Capital One Venture Rewards Credit Card and later decide to open their card, they’re still eligible for whatever welcome bonus the card offers when they apply. This allows both the primary cardholder and the authorized user to maximize their rewards.
However, adding an authorized user doesn’t come without risks. The main risk is that the primary cardholder is still responsible for all charges posted to the account, even if the authorized user makes the purchase. With this in mind, it is crucial to only add extremely trusted individuals as authorized users on your card.
One way to mitigate this risk is by adding spending limits to authorized user cards. Some credit card issuers, like American Express, allow you to set limits as low as $200 for authorized user cards. This way, you can control the spending and minimize the risk of unauthorized charges.
On the other hand, authorized users also take on some risk when added to someone else’s account. If the primary cardholder doesn’t pay their bill on time, it can negatively impact the authorized user’s credit. In such cases, it is essential for the authorized user to communicate with the primary cardholder and ensure that the bills are paid on time.
If an authorized user finds themselves in a situation where the primary cardholder is not managing the account responsibly, they can call the issuing bank and ask to be removed as an authorized user. They can then dispute any late payments with the credit bureaus if necessary.
In conclusion, adding a loved one as an authorized user on a credit card can have several advantages. It can simplify financial management, help accumulate more rewards, and provide additional perks. However, it is crucial to consider the risks involved and only add trusted individuals to your account. Communication and responsible credit card usage are key to ensuring a positive experience for both the primary cardholder and the authorized user.