Authorized User: Definition, Rights, and Responsibilities

An authorized user is someone who has official permission to use another person’s credit card but isn’t legally responsible for paying the bill. For personal cards, authorized users are often family members, such as a child or a spouse.

Cards must authorize users. However, some banks have minimum user ages, but anyone can be permitted. In contrast, unlike principal cardholders, authorized users are not credit-reviewed. Moreover, some credit card issuers give authorized users a unique card linked to their primary account.

On the other hand, others let authorized users use the primary account holder’s card. Nevertheless, credit card charges are not the responsibility of authorized users. Even though the primary cardholder may expect the authorized user to pay for everything, they are legally responsible. Furthermore, since one partner is an authorized user on the other’s credit card, the cardholder is liable for any charges incurred after the breakup. In some cases, authorized users may pay the cardholder to help the principal.

Alternatively, the principal cardholder could also let them pay online. It’s important to note that card statements may split authorized users’ spending, although they rarely arrive monthly. Additionally, authorized users have card usage limits. However, authorized users cannot add users, change account addresses or PINs, request credit limits or interest rates, or close accounts. In contrast, primary cardholders can limit approved user spending, not the card issuer. As an example, some American Express cards enable primary cardholders to limit authorized users to $200.

Many people improve or rebuild credit by becoming authorized users on others’ credit cards. Specifically, for those with a “thin file,” being an authorized user is one way to get a credit card and build a credit history. In particular, students and recent grads often face this challenge. Moreover, becoming an authorized user might also help someone with a poor credit score get approved for a card. However, adding you as an authorized user won’t affect your credit reports or scores unless the card issuer includes you in the information it sends to the main credit agencies.

On the downside, if the authorized user or primary cardholder runs up a lot of debt or can’t pay their bills, it can lower both their ratings. Just as primary cardholders must be careful when adding an authorized user, would-be authorized users must be sure they’re not entrusting their finances to someone who’ll hurt their credit.

Adding an authorized user to a credit card isn’t the only way that two people can share an account. Another is opening a joint account together. The principal difference between these two arrangements is that with a joint account, both parties’ credit scores will be considered when they apply, and if they’re approved, they’ll both be legally responsible for making payments.

People who can’t get a credit card on their own have additional options:

Find a co-signer: A co-signer signs a credit card application and agrees to pay the debts if the applicant defaults. Modern card issuers rarely accept co-signers, making it hard to find one that does. Co-signing for mortgages and car loans is still widespread.

Secured credit cards are distinct from unsecured cards and are for persons with bad credit or a limited credit history. An individual deposits money into a bank account linked with the card issuer to establish a credit line on a secured card. Cardholders can use the card like other cards but can’t spend more than their deposit. Cardholders can usually get a regular card after using and paying their protected card. Most major card issuers provide secured cards.

Sarah and David, a newly married couple with a strong credit history, decide to use the concept of authorized users to help David improve his credit. Sarah adds David as an authorized user on one of her credit cards, allowing him to make purchases using Sarah’s account.

This responsible use contributes positively to David’s credit history, establishing a credit history and demonstrating responsible credit use. David’s credit score improves over time due to on-time payments, lower credit utilization, and Sarah’s positive credit history.

However, potential pitfalls include shared responsibility and straining their financial relationship. After a year, David’s credit score significantly improves, making it crucial for their future financial endeavors.

An authorized user is someone who has permission to use another person’s credit card but is not legally responsible for the bill.

Becoming an authorized user can help build or rebuild credit if the card issuer reports the information to credit bureaus. However, if either the authorized user or the primary cardholder fails to pay charges, it can negatively impact both their credit scores.

Yes, primary cardholders can remove authorized users from their accounts, but they remain responsible for any charges up to that point.

Many card issuers don’t charge for adding authorized users, although some (particularly premium or rewards cards) may charge a modest fee.

Some card issuers allow for multiple authorized users, although they may cap the total number.