Pros and cons of being an authorized user on a credit card
The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict , this post may contain references to products from our partners. Here's an explanation for . The content on this page is accurate as of the posting date; however, some of the offers mentioned may have expired. Terms apply to the offers listed on this page. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.
There are several reasons to become an authorized user on a credit card, although improving your credit score is the most common. Becoming an authorized user typically helps you build credit by piggy-backing off the primary account holder’s responsible use, and you can get this benefit without applying for a credit card of your own.
Authorized user cards are also common among spouses and partners who want all their credit card purchases to show up on one account, as well as those who want their combined purchases to earn rewards in one place.
No matter the reason, there are pros and cons involved for all parties any time an authorized user is added to a credit card account. Read on to learn the benefits, drawbacks and other factors to consider.
Pros of being an authorized user
When someone adds you as an authorized user to their credit card account, you will get your own credit card with your name on the front or back. Beyond this convenience, there are other advantages to be aware of.
Build credit with the help of someone else
The main benefit of becoming an authorized user on a credit card is the fact that you can lean on another person’s good credit to build your own. Provided the card issuer reports credit balances and payments to the credit bureaus, on-time payments made on the card by the primary cardholder will be added to your credit history and boost your score over time.
Many parents add their teenage children as authorized users on their credit cards. They might give them a copy of the card to use for emergencies, or they might keep it tucked away for a few years. Either way, when the child turns 18 and is able to apply for their own credit card, they already have years of credit history to help them out.
You don’t have to get approved for your own card
Becoming an authorized user also lets you avoid having to apply for a card on your own, which is a major benefit if you currently have bad credit or no credit history at all. As a result, you can often get an authorized user card with better rewards or benefits than you could get otherwise.
Boost the family rewards account
Two people using a credit card generally means higher balances, which means rewards tend to accumulate faster. If half of your household’s purchases are usually made with debit, combining forces with one rewards card will boost rewards earnings big time. This strategy can help couples earn rewards they can use together, such as cash back to offset a large purchase or travel points for a vacation. Here are some of the best credit cards for couples.
Cons of being an authorized user
With every financial decision there are potential pitfalls. Consider these and how you can avoid them before you become an authorized user or add one to your credit card account.
The primary cardholder takes full financial responsibility
First off, you should know that the person who originally had the credit card is solely responsible for all purchases made. This is true even if the authorized user promises to pay off their charges but fails to do so.
At the end of the day, authorized users are not legally responsible for paying off anything they buy with the card. For that reason, it’s important that the primary cardholder trusts the authorized user to use the card responsibly. And even then, there’s always a degree of risk.
The good news is that you can always remove an authorized user or lock their card if you’re unhappy with their card usage. Some credit cards even let you set spending limits for authorized users.
Credit mishaps can hurt your credit score
It’s also important that the authorized user trusts the primary cardholder. Late payments and other credit mishaps can harm the credit scores of both the primary account holder and the authorized user. If you decide to become an authorized user on someone else’s account, make sure you only do so with someone who has a long history of responsible credit use.
You won’t earn your own rewards
If you become an authorized user on someone else’s credit card, you should also know that the primary cardholder will get all the rewards. This may not be a big deal if you’re strategically pooling points with a partner or a spouse, but it can be a bummer if you were hoping to earn rewards you could use as you please.
Frequently asked questions (FAQ)
If you are thinking of becoming an authorized user but you are also considering getting a credit card of your own, you should know that some alternatives exist. For example, you may be able to qualify for a secured credit card if you’re willing to put down a small cash deposit as collateral. You can also consider other credit cards for bad credit or student credit cards that may be easier to qualify for.
The primary cardholder is 100 percent responsible for repaying all purchases made by authorized users on their card. This means that, if an authorized user doesn’t pay you back, you don’t have any recourse.
The benefit to your credit score can vary depending on a whole host of factors. However, there’s a good chance your credit score will improve over time if the primary cardholder makes on-time payments on their card each month.
Removing an authorized user on a credit card won’t have any impact on the primary cardholder’s credit score. It may decrease the authorized user’s credit score because it will decrease their available credit and their average age of accounts, two main credit score factors.
The bottom line
There are several reasons to become an authorized user on another person’s credit card account, but the most common benefit is building credit when you can’t qualify for a credit card on your own.
It’s a good option if you don’t have many others, but there are risks for both parties. Before you become an authorized user, find out if you can qualify for a credit card of your own. The best credit cards for no credit history can offer the credit-building opportunity you’re looking for, too. Consider using Bankrate’s CardMatch tool to see if you’re prequalified for a credit card that could help you build credit, earn rewards or both.