An authorized user is someone who is allowed to use someone else’s credit card. The person who owns the credit account is called the primary cardholder.
Authorized users may be issued their own credit card with their name on it, but the account belongs to the primary cardholder.
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Authorized users can make purchases on the account, but generally cannot make changes to the account itself — like increasing the credit limit or adding more authorized users.
Authorized users aren't required to make payments on the credit card either, regardless of how much they spend.
Payments and changes are the responsibility of the primary cardholder.
A major incentive to being an authorized user is piggybacking off the primary cardholder’s good credit habits to help your credit scores. Many card issuers report credit activity to the credit bureaus for authorized users, but some may not.
The primary cardholder will need to ask their card issuer if this information is reported in order for the authorized user to receive the benefits of good credit history.
The primary cardholder has to add an authorized user. This can be done by calling the credit card issuer or logging onto the online account. Many issuers will issue a second card for the authorized user, but it will generally be mailed to the primary cardholder, who can choose to give it to the authorized user or not.
If the card isn’t distributed, the authorized user can either use the primary cardholder’s card, or simply reap the credit benefits of the cardholder’s good financial habits.
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What if your circumstances change?
- Perhaps your boyfriend is an authorized user on your account and you break up.
- Or maybe you’re the authorized user on the account of a relative who dies.
- Or you're an authorized user who's hit some financial troubles and doesn't want the temptation of a credit card anymore.
Fortunately, it's easy to remove someone — or yourself — as an authorized user with a phone call to the card issuer.
(As noted above, authorized users generally don't have the right to make changes to the account, but the exception is if they wish to remove themselves from the arrangement.)
A joint credit card account differs from an authorized user arrangement in a couple of key ways:
- In the case of a joint account, both of you are equally liable for the debt.
- Joint credit card accounts usually must be set up on the front end, during the application process. (Authorized users can typically be added anytime after the account is opened.)
Few issuers offer joint credit card accounts anymore. If you find one that allows them, it might make sense in certain cases — say, for a married couple looking to have all of their finances under one roof. But be aware of the potential pitfalls because that shared liability can become a problem if the relationship goes south.
In the case of divorce, for instance, without clear guidelines on who’s responsible for the debt, both parties’ credit scores will suffer if payments aren’t made. Even if the judge assigns the debt to one of you, non-payment can affect both account holders.
Depending on your circumstances, adding a loved one as an authorized user could be the better route. That person will get the benefit of good credit — provided you practice responsible credit habits and your issuer reports the activity — and you will still retain control of the account.
However, keep in mind that you will be fully financially responsible for an authorized user's charges, so you may want to set clear monthly spending guidelines ahead of time.
