Sharing credit with someone else can be tricky, so it’s important to ask the right questions before you agree to one of these arrangements. For instance: If you add an authorized user to your credit card account, can he or she redeem rewards earned with the card?
If you’re not sure of the answer, take a look at the details below. The Nerds did some research, and we’re excited to share the results!
What it means to add an authorized user
If you choose to add an authorized user to your credit card account, this means you’re giving someone else the ability to make charges to it. The authorized user will receive a card in his or her name, and will have the ability to charge up to the credit limit. However, authorized users aren’t liable for making any payments on the card – this responsibility falls squarely on the shoulders of the primary cardholder.
For most folks, becoming an authorized user on someone else’s account helps beef up a poor or nonexistent credit history. Here’s how it works: Most credit card issuers send a monthly report about your account (balance, payments, etc.) to the three major credit bureaus. In some cases, if there’s an authorized user on the account, the issuer will send in a separate monthly report to the bureaus for him or her. As a result, the card activity counts toward both the primary and authorized user’s credit profile.
It might seem strange that someone would choose to let a friend or family member make charges to their card without taking on any official responsibility for making payments. But the benefit to adding an authorized user to your card – as opposed to cosigning someone else’s card – is that you’ll still maintain a large degree of control over the account. You’ll be able to easily see the charges made, and can drop the authorized user quickly if things start to go south.
Can authorized users redeem rewards?
One great perk to adding an authorized user is that all the spending he or she does with the card earns rewards for your account. But you might be wondering if the authorized user can also redeem those rewards – in other words, can he or she go online and cash in the miles or points you’ve both been racking up?
To answer this query, the Nerds made calls and conducted online chats with customer service representatives from seven of the biggest credit card issuers in the United States. As it turns out, their policies surrounding authorized users and rewards redemption vary pretty significantly. Here's a list of whether issuers allow authorized users to redeem rewards:
Citi: With a cash-back card, the authorized user can request a check, but it will be made out to the primary accountholder. With cards that earn ThankYou points, the primary accountholder can gift points to the authorized user. Otherwise, the authorized user cannot redeem points.
Bank of America®: No.
Discover: No; according to Discover, this constitutes a "change to the account." Only primary card users can make changes to the account.
American Express: No.
Wells Fargo: The primary accountholder can designate an authorized user on the card, the rewards, or both. Unless the authorized user is specifically labeled as the authorized user of rewards, he or she can't redeem them.
Capital One: Yes.
If you’re thinking about adding an authorized user to your credit card account, here are some key takeaways to keep in mind when it comes to rewards:
Rewards earned by an authorized user are available to the primary cardholder.
If you want your authorized user to be able to use rewards, consider getting a card issued by Chase or Capital One.
If you want your authorized user to have limited or no ability to use rewards, consider getting a card issued by Citi, Bank of America, Discover, American Express or Wells Fargo.
If your card isn’t issued by one of the banks listed above, be sure to put in a call to customer service to see what their policy is about allowing authorized users to access rewards.
Have a conversation with your authorized user about your expectations regarding rewards. Be specific about if, how and when they’re permitted to access them (if the issuer allows it, of course). It’s always best that both parties are on the same page before the card is handed over.