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Everything you need to know about authorized users

Adding or becoming an authorized user can help maximize rewards and boost your credit score, but be careful of potential risks

Summary

The decision to add an authorized user to your credit card account should not be taken lightly. And while becoming an authorized user comes with many great benefits, there are some serious implications to consider.

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The decision to add an authorized user to your credit card account should not be taken lightly. When you authorize a person to make charges to your account, you are the one responsible for paying for their purchases with the card linked to your account.

Becoming an authorized user comes with many great benefits, including building credit history and boosting your rewards. And for every dollar that your authorized user is spending, you can earn points, cash back or miles.

But despite benefits, there are some serious implications to consider when an authorized user is added. Read on for everything you need to know to make informed decisions about adding authorized users to your credit card account.

What is an authorized user?

An authorized user is someone who has been given formal permission by a cardholder to use their credit card and has been added to the account.

“For instance, a spouse can be an authorized user on your card, as well as some other close family member, such as a teenage or college-aged child,” says Monica Eaton-Cardone, COO and co-founder of Chargebacks911.

Once added to an account, authorized users get their own card issued to them with their name on it. All purchases made on either your card or an authorized user’s card then are charged to, paid on and earn rewards on the same account. The primary cardholder is responsible for the debts on all cards issued on that account.

Considerations for adding or becoming an authorized user

So what’s the benefit of adding an authorized user to one of your credit card accounts – or becoming an authorized user on someone else’s account?

The most common reason to add an authorized user to your account is to enable that designated person to use the credit card to make purchases linked to your account.

“Your spouse, for instance, may need to use your card from time to time, so adding them as an authorized user allows for this,” Eaton-Cardone says.

It can also help your authorized user’s credit history by adding positive data to their credit report.

For people who want to establish credit history and in turn boost their credit score, opening a credit card account is a good step toward achieving these goals. Becoming an authorized user is an easier way to do this than opening your own accounts because you won’t have to qualify based on your own credit history. Anyone can be added as an authorized user.

Once you’re on the account, the payment history exhibited by the primary cardholder is reported to the three credit bureaus. 

See related: Payment history: The most important credit score component

How to add an authorized user

To add an authorized user, contact the bank that issued your card, either via its customer service phone number or online platform. Have important details on hand for your authorized user, including their legal name, date of birth and Social Security number. Overall, it’s a relatively quick and simple process, Eaton-Cardone says.

Be aware that there could be fees associated with adding an authorized user to your account.

How to remove an authorized user

The process for removing an authorized user is largely the same as adding one; you can contact your issuer and request to remove the individual from your account.

“Be aware, though, that while removing a user won’t impact your credit, it will negatively impact the credit of the person you remove from the account,” Eaton-Cardone warns. “That person won’t have your credit available to calculate as part of their credit utilization ratio, which makes up about 30% of their credit score.”

Understand the risks

Although there are several great reasons to add an authorized user to your account, there are some potential downfalls you should know beforehand.

Their debts will be your debts

When you add an authorized user, you’re allowing that person to use your credit. If they are irresponsible, it could negatively impact your credit and cost you money down the line, says Eaton-Cardone.

“You could end up with a higher credit utilization ratio, as well as a large bill for which you’re ultimately responsible,” she explains.

It’s important to have a clear discussion with your authorized user before handing over the card.

“The key here is responsibility. Before adding an authorized user to your account, you should establish ground rules for when you expect that person to use the card and how much they may charge,” Eaton-Cardone said.

Otherwise, you could rack up a revolving debt, which will cost you interest, as well as use up more of your available credit, she says.

Relationships may be strained

Another negative aspect of adding an authorized user is how it can impact your relationship with your family member.

“Sometimes, primary cardholders expect the authorized user to pay for the charges they made on the account,” says Karra Kingston, a bankruptcy attorney with offices in New Jersey and New York.

Although the cardholder and the authorized user might have made a repayment agreement, this doesn’t change the primary account holder’s responsibility.

“If the authorized user doesn’t pay for the charges they made, the primary account holder will still need to make the payments,” Kingston says. “If an authorized user fails to pay for the charges they have been putting on the card, this can cause a strain in the relationship.”

Cash advances and checks can be requested

Kingston says most cards don’t set limitations on how much an authorized user can spend or request on an account.

“Authorized users can take cash advances out just like the primary cardholder, and an authorized user can call up and request the checks with the primary accountholder’s name,” she cautions. “An authorized user is allowed to take whatever the primary holder’s cash advance limit is.”

Allowing authorized users to take out cash advances on a credit card can be dangerous.

“Cash advances typically have higher interest rates and don’t usually provide any grace period to pay back interest on purchases,” Kingston said. “The primary cardholder’s credit score can be severely impacted if the authorized user takes out cash advances and doesn’t pay them back.”

See related: Cash advances are a pricey way to get cash fast

Benefits of adding an authorized user

There are many perks that could sway you to add an authorized user to your account. From helping your child build credit history to racking up more rewards, adding an authorized user can offer many benefits.

Build credit history

Adding a child or family member to your account to help build their credit is a common goal. “Even if your children never use your card, simply having them as authorized users on the account establishes credit history,” says Eaton-Cardone. This allows them to start building credit from an early age – assuming your account remains in good standing.

Track spending

Another benefit is this arrangement provides a way to track the spending habits of your authorized users. By using your online account or the issuer’s app, you can see what your authorized user is purchasing (helpful if you want to monitor your teenager’s spending, for instance).

Maximize rewards

Reaping the rewards of your authorized user’s spending is a big reason you might add them to your account. “This is most useful with travel cards, especially luxury cards with generous perks and benefits,” says Steven Dashiell, credit cards expert at Finder.com.

With every purchase, your authorized user is earning rewards – points, cash back or miles – on your credit card account.

Enjoy perks

In many cases, Dashiell says, an authorized user can “double-dip” on a card’s perks and benefits. “That means an authorized user might also gain separate access to eligible lounges, discounts for using the card or in some cases, their own separate statement credits on certain perks,” continues Dashiell. “What an authorized user has access to can vary based on the card and issuer, so you’ll want to read a card’s terms and conditions to get the full scoop.”

Best cards for adding an authorized user

There are some credit cards that offer particularly valuable perks for adding authorized users on an account. Here are three standouts that offer additional cardholders benefits:

CardRewards ratePerks for authorized users
The Platinum Card® from American Express
  • 5 points per dollar on flights booked directly with airlines or with American Express Travel (starting January 1, 2021, earn 5X points on up to $500,000 on these purchases per calendar year)
  • 5 points per dollar on eligible hotels booked with amextravel.com
  • 1 point per dollar on general purchases
  • Terms apply
  • Airport lounge access to Centurion Lounges, Delta Sky Clubs (when flying Delta) and Priority Pass lounges
  • Additional Global Entry or TSA Precheck application fee statement credit
  • Read more about Amex Platinum authorized user perks
Chase Sapphire Reserve®
  • 10 points per dollar on Lyft purchases (through March 2022)
  • 5 points per dollar on Instacart purchases (through 9/30/2020, on up to $3,000 in purchases per month)
  • 5 points per dollar at gas stations (through 9/30/2020, on up to $1,500 in purchases per month)
  • 3 points per dollar on travel and restaurants (excluding purchases covered by $300 travel credit)
  • 1 point per dollar on general purchases
Citi® / AAdvantage® Executive World Elite™ Mastercard®
  • 2 miles per dollar on eligible American Airlines purchases
  • 1 mile per dollar on other purchases
  • Full Admirals Club membership with same-day boarding pass for eligible American Airlines or partner flights (and can bring up to two guests)
  • Priority check-ins, priority boarding, first checked bag free for you and up to eight companions traveling with you on the same reservation
  • Additional Global Entry or TSA Precheck application fee statement credit

Alternatives to authorized users

If the risk versus reward scenario for adding an authorized user to your credit card account poses too much worry, there are alternatives.

Credit-building credit cards

One alternative to adding your child to your account is to let them open a credit card designed specifically for first-time cardholders instead. Eaton-Cardone suggests the Deserve EDU Mastercard for Students. “This is a great option for young adults who are headed off to college. It doesn’t require a credit history, but it allows young people to familiarize themselves with how to use and manage a credit card account,” she explains.

Secured credit cards

A secured credit card is also a practical option for someone looking to build credit history and manage spending. The main difference between a secured card and an unsecured card is you’ll need to put down a security deposit before you can open your account. This security deposit acts as your credit limit, as well as collateral for the provider, says Dashiell.

Joint account holder

Dashiell says using a card as a joint account holder works nearly the same as being an authorized user on an account. The main difference is that both parties are financially responsible for the account. With responsible use, this alliance may keep budgets in line and could reduce frivolous spending.

But, on the flip side, if someone misses a payment or someone maxes out the card, it will reflect poorly on both users’ accounts, he cautions.

Bottom line

There are many responsibilities to understand if you choose to add an authorized user to your credit card account. First, you – and you alone – are responsible for the purchases they charge on your credit card, even if they promise to pay them.

But being an authorized user can raise a child or family member’s credit score and teach them responsible credit card use. Plus, you can earn points, cash back and miles from their purchases.

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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Credit Card Rate Report Updated: October 21st, 2020
Business
13.91%
Airline
15.50%
Cash Back
15.85%
Reward
15.75%
Student
16.12%

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