Adding An Authorized User To a Credit Card?
Q: Do you think it’s a good idea to add an authorized user to my credit card account?
A: Thanks for your question Lynn. Most credit cards (almost all) will allow the account holder to add on authorized users. For those that choose to add a user, they usually add only one. However there are some credit cards that let you add multiple users if you so choose. But whether it’s one or five, is this a smart move? Let’s take a closer look…
Why Add An Authorized User?
Perhaps you are a parent who wants your son or daughter to have a card. Maybe you run a small business and would like one of your employees to have their own credit card for convenience. But most often, it seems to be that the new card is issued to their spouse – whether that be a husband or wife, boyfriend or girlfriend.
The Pros
- Adding a user is a convenient way to give someone access to your line of credit for purchases
- The places the authorized user spent money will be listed on your monthly statement
- It can be a way to help build credit for the authorized user, if their Social Security number is provided. In September 2007, FICO took away this “piggyback” privilege, but they reverted back in July 2008 and decided to count authorized users once again (and as of 2012 it continues to be that way).
The Cons
- If there’s one piece of advice you get from this post, it is that adding an authorized user to a credit card is almost always a bad idea when it comes to boyfriends/girlfriends. I can’t even begin to tell you how many horror stories I’ve heard. They thought because they were together for years it would be okay to do. Lo and behold, the relationship would go sour and the authorized user would rake up excessive amounts in charges. Unfortunately, the main cardholder would have no recourse since the other person was authorized to do that. So essentially, you are handing someone a blank check when you do this.
- Parents like the idea that they can see where their kids are spending money, but the truth of the matter is that kids are crafty these days. They will buy a pack of smokes or bottle of booze at the grocery store so it looks like a food purchase. I’ve even heard of them going to a grocery or drugstore to buy a gift card (they usually offer them for dozens of different places). So the idea that the parent knows what their kid is buying is really an illusion.
- Authorized users also have a tendency to spend more than if they were responsible for the charges, since it’s OPM (other people’s money).
Conclusion
Just make sure you think long and hard before adding anauthorized user to a credit card. If you want your kid that’s 18 years or older to have the benefits of a credit card, but without the temptation to overspend, then you may want to consider the new AmEx Zync Card. It’s a charge card, so the balance cannot be carried from month to month. It’s also geared towards college students and people trying to establish their credit. Check out our American Express Zync Card review to find out more.
I am trying to help my young adult son establish credit by piggy backing on my credit card. My credit is good, his is bad. I was thinking of adding his name and SS# to my credit card, and not give him the one that would be in his name. How long would it take for him to show this credit so he could apply for his own card? Also even though he would not be using my card while his name is on it, can his bad credit affect me in any way because his SS# is linked to my account?
Also he is in default of a student loan, can the IRS or any one else come and take money/credit from the card where both our names are on?
I would like to get this clear. If I do not provide the persons social when adding them as an authorized user, they are just getting a duplicate card with their name on it and it does not report/affect their credit? If I mess up then it will not affect their credit right?
Is is possible to authorize someone to use my account, but for them to have a limit separate from my own normal credit-limit?
I don’t mind (generally speaking) to take a bit of a risk to help her rebuild her credit. But I definitely don’t want to give her access to my full credit limit. My oldest card (and the one with the lowest interest rate) has a limit of $75,000. While I believe she has learned her lesson, I, needless to say, don’t want her tempted with my nearly 100-grand limit (that’s just asking for trouble). Is it was possible to give her $1,000 or so of my limit.
If not, I suppose I could authorize her with one of my lower-limit cards I never use (though I never use them anymore because the interest rates are kind of high compared to my main card).
How can you request a credit card company to use a SSN when piggy-backing? Mine only issued a secondary card with a different name on it. But that does nothing for me trying to help my son re-build his credit and credit score. What is my next step with the card issuing company to help my son? Should I tell them what I am trying to do?
This is a great option for a spouse that has poor credit, but the other has excellent credit. If the person with excellent credit has multiple credit cards, make sure the authorized user is added to the oldest card. A percentage of your credit score goes to length of history.
My credit is great, but the person I am thinking of adding, to help their credit score is bad, like 500 or so, will that make my score go down?
Well if they mess up the account, yes. And given their score of 500 I would say the odds of them doing that are pretty good.
We are trying to help my husband improve his credit scores. We were advised that a good way to do this was to add him as an authorized user to some of my accounts which I did.
The sole purpose is just for him to benefit from my excellent credit standing. He won’t actually probably ever even use the cards. My question/confusion is I added him to 3 or 4 of my revolving accounts but none of them asked for his social security number. How can they report on his credit without having his social?
I was assured by a couple companies that they didn’t need it, but one did say they were going to send me something to fill out. The whole point of me adding him is to help him build his credit, I explained this to all, and some said that it would not affect his credit score, in which I didn’t bother with adding him to those particular accounts but others said yes they could report it to his credit and do so solely by having his name and address.
I thought a creditor had to have a person’s social in order to report on their credit, am I wrong? Thanks!
You are correct- they need to be using his SSN. Sounds like they probably just issued you secondary cards under a different name.
Do you recommend authorized users for college kids?
Unless a person is the one responsible for making the payment themselves each month, they will never learn the meaning of responsibility. That’s why I’m against authorized users.