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Adding an authorized user can be mutually beneficial for both parties. You allow the user to piggyback on your good credit, and, if it's a rewards credit card, they can help you earn more points, miles or cash back with their purchases. Depending on how much you and the authorized user spend, your rewards could grow quickly, perhaps by hundreds of dollars.
On the flip side, an authorized user may be able to redeem those rewards. It’s important to know whether the person can access rewards so that you’re both aligned on expectations for how to use them. You don't want to go to cash in your miles for a big trip, for example, only to find they've already been used.
Get to know which major credit card issuers allow authorized users to redeem rewards.
Rewards redemption policies for major credit card issuers
Reward redemption policies for credit card issuers vary. If rewards are important to you, connect with your issuer before adding an authorized user to better understand its policy. It could mean the difference between losing several hundreds of dollars or sharing it.
Here are the reward redemption policies of some major credit card issuers:
CREDIT CARD ISSUER
REDEMPTIONS FOR AUTHORIZED USERS
Yes. If the primary cardholder designates an authorized user as an "account manager," they may redeem rewards online, on the mobile app or by calling into the issuer's service center.
Bank of America
Yes. Authorized users may redeem rewards if they call the issuer and speak to an agent.
Yes. Authorized users may redeem rewards if the primary cardholder approves them to do so. "Authorized redeemers" can apply rewards toward the Pay With Rewards PayPal wallet feature or redemptions made via the call center channel. Restrictions apply.
Yes, but to clarify, American Express doesn't have "authorized users." The issuer allows "additional card members" who may move or redeem points on the account if the primary cardholder gives them the option.
No. Authorized users cannot redeem rewards.
No. Authorized users cannot redeem rewards.
No, but exceptions exist. An authorized user can redeem ThankYou points with participating Shop With Points merchants if the account number is linked to the ThankYou account.
Rewards and rewards redemption shouldn't be the main driver in determining whether to add or keep an authorized user. An authorized user should be on your account only if they can be trusted to meet your terms, such as paying their share of the bill and not overspending.
Managing expectations for reward redemptions
Once you know your credit card issuer’s rewards redemption policy, determine whether it aligns with your goals. If you add an authorized user to a credit card that allows them to redeem rewards, be prepared to manage expectations.
Here are a few topics to consider for discussion:
Will you have shared goals with rewards? What are they?
Will you share rewards? How will they be divided?
Will you be required to consult each other before redeeming rewards?
What are acceptable forms of redemptions? Is it OK to redeem for an option like merchandise, which may not be the best value?
An authorized user may not fully understand the significance of the credit risk you're taking to benefit them. If you’re both contributing to the rewards pile with every purchase, they may want access to those rewards. To avoid any misunderstandings, have an in-depth conversation that includes your own terms and conditions for allowing them to use a card linked to your account. You should also discuss spending limits and potential payment agreements, assuming you're not solely covering the bill. The primary cardholder is responsible for the bill even if your authorized user doesn’t pay you back.
To cover yourself, be prepared for hiccups. Plan for the possibility that an authorized user won't be able to pay you back. Contribute more to an emergency fund to cover the amount. Also, prepare to part with rewards if an authorized user has access to them. Don't rely on your rewards pile to supplement your budget, because they may not be there when you need them.