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Is it time for you and your spouse to tie the credit knot?
This Valentine’s Day, many couples will get each other the usual gifts: flowers, chocolates, restaurant reservations and — if the time is right — a ring. However, Valentine’s Day is also a good time to pop a different kind of question: would you like to be an authorized user on my credit card?
According to a recent Policygenius survey, only 20 percent of people keep their finances fully separate from their partners’. Adding your partner as an authorized user on your credit card is one way to bring the two of you closer together — financially, that is.
Here are some of the pros and cons of adding your spouse as an authorized user, as well as how to get the job done and what happens if you break up.
How do you add an authorized user to your credit card?
Once you’ve agreed that it’s time for you and your honey to tie the credit knot, it’s easy to add your partner as an authorized user. In most cases you can add an authorized user directly from your online account; if you prefer to work via phone you can contact your credit card customer service department. You’ll need some basic personal information about your partner, such as date of birth (which we hope you already know), legal name and Social Security number.
Once you have successfully added an authorized user to your credit card, they’ll receive their own credit card in the mail (no, the two of you don’t have to share a single card!). They can begin making purchases with their new credit card, which will appear on your credit card account. Although your boo can give you money to cover the cost of their purchases, you are the only person who can make a credit card payment on this shared credit card.
What are the benefits of adding an authorized user to your credit card?
There are three big benefits of adding an authorized user to your credit card. If you earn more money than your partner does, adding your partner as an authorized user on your credit card gives them the opportunity to make purchases that you can pay off from your larger bank account. (In other words, you don’t always have to be the person who goes grocery shopping.) If you’re thinking about combining finances with your significant other, adding them as an authorized user on your credit card is a good first step.
Likewise, if you have much better credit than your partner, adding your partner as an authorized user can help give their credit a boost. This is especially helpful if your partner has poor credit and is having trouble getting a credit card of their own. (Be aware that not all credit card companies report authorized users to the three major credit bureaus, so make sure your partner will get the benefits of shared credit before setting them up as an authorized user.)
Lastly, adding an authorized user to one of the top rewards credit cards or top travel credit cards can help you rack up those points and miles. With two people making purchases on the same credit account, you’ll quickly accrue rewards that might help fund your next big vacation together.
Are there any drawbacks to adding an authorized user?
Since you will be responsible for paying off all credit card debt incurred by your authorized user, make sure you and your sweetie are on the same page both romantically and financially. If your partner racks up a bunch of charges that neither of you can afford to pay off, you could be stuck with both the credit card debt and the interest.
The drawbacks cut both ways, though. If you miss a payment on this credit card or carry too high of a balance, it will negatively affect both your and your partner’s credit.
If you and your special someone want to have a successful authorized user experience, you’re going to need to utilize two very important relationship skills: trust and communication. (You might also want to use a budgeting app to help you keep track of expenses and help you make your payments on time.)
How does adding an authorized user to your credit card affect credit scores?
When you add an authorized user to your credit card account, both of your credit scores could increase or drop depending on how the card is used. If you and your significant other max out your credit card, for example, the increase in your credit utilization ratio could lower both of your credit scores.
You can also hurt your partner’s credit score by missing payments or making late payments. Remember that you are the only person who can pay off the balance on this credit card — your partner can help by reimbursing you for purchases, but your partner cannot make a credit card payment. You need to make sure you always pay your credit card bill on time, or you run the risk of damaging both your and your partner’s credit score.
On the other hand, if you and your partner both use the credit card responsibly, expect to see a positive effect on both of your credit scores.
Can you remove an authorized user from your credit card?
Nobody wants to think about what happens after a relationship ends — but if you find yourself in a situation where you need to remove a not-so-special someone from your credit card, it is a quick and easy process. Simply visit your online account or contact the credit card company to remove the authorized user, and your former partner will no longer be able to make purchases against that particular line of credit. (Then grab that tub of ice cream, curl up with a favorite movie and take some time to let your heart heal.)
Adding your spouse as an authorized user on your credit card is one way to start combining your finances with your partner’s. However, it comes with its share of risk — your partner could put you in credit card debt, you could miss payments and tank your partner’s credit score — and is not something you want to jump into in the early stages of the dating process. If you feel like you’re ready to take your relationship to the next level, grab that sappy card from the drugstore, pick up that box of chocolates and ask your beloved if they’d like to share a line of credit with you.
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