Since you are ultimately liable for payments on your account, you should be aware of what an authorized user can and can’t do.
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Adding an authorized user, such as a friend or family member, to your credit card could help them build up their credit history. However, you might want to know what an authorized user can and can’t do with their card before adding them. That’s because the primary cardholder bears the ultimate responsibility for any charges on the card.
Can an authorized user access cash from a credit card?
Reader Frank wants to know, for one, if an authorized user on his credit card can take out a cash advance on the card.
An authorized user can access cash advances, much like the primary cardholder can. Discover, for instance, allows authorized users to engage in cash advance transactions, which can be done on the telephone. And if the primary user has not opted out of receiving cash advance checks, the authorized user can also request them. The checks would be sent in the primary cardholder’s name.
But, Frank asks, what is the maximum amount of his cash advance limit they can access? That is typically tied to the cash advance limit available on the primary cardholder’s account, as well as the status of the primary cardholder’s account.
The particular card brand the primary cardholder uses also has an impact. Discover does not set any specific limit for the authorized user. Other card issuers such as American Express and Chase have similar policies.
Authorized users can access cash advances – but should they?
Just because an authorized user can access cash advances, it doesn’t mean that they should tap into the funds.
Considering that cash advances typically carry higher interest rates than purchases, and also start charging interest right away without any grace period, this is not a good use of the credit card.
The primary cardholder should make the authorized user aware of this, and ensure they don’t get a cash advance unless there is a legitimately urgent need for the funds.
Your credit score could be affected if the authorized user runs up charges that you will have to repay (credit utilization is the second most important factor in FICO’s scoring formula). So you might also want to be aware of other things that an authorized user can’t do, as well as what they can do without getting your nod.
Actions forbidden to authorized users
Even though they can access cash on your account, there are limits to other activities an authorized user can engage in. Each card issuer has its own policies, but in general authorized users are not permitted to:
- Shut down the account.
- Add another authorized user. Only the primary cardholder can do that.
- They can’t also remove another authorized user, or the primary cardholder, from the account.
- Change the address associated with the account.
- Ask for a rise, or decrease, in the card’s credit limit.
- Ask for a lower interest rate on the card.
- Change the card’s personal identification number.
- Access assistance from an account center without the primary account holder’s permission.
- Receive FICO scores.
- Redeem rewards.
- Access the primary cardholder’s transaction information.
Actions permissible to authorized users
Depending on each issuer’s specific policies, an authorized user may be able to:
- Report a lost or stolen card.
- Get additional cards.
- Access information about the account.
- Set off a billing dispute.
- Ask for copies of statements.
- Make payments.
- Look into fees on the account.
- Take themselves off the account.
- Enroll themselves in rewards programs.
- Transfer a card balance.
See related: Can you really win the balance transfer game?
Authorized user’s behavior impacts primary cardholder’s credit
Considering that your card issuer will report all activity on the card to the credit bureaus, your credit history is at stake when you add an authorized user.
That’s why even though the card issuer allows them to take out cash on your credit line, you should set the boundaries with the authorized user before you add them to your account.
For instance, if they do access cash, establish who will be responsible for paying it back. Also, be clear who will pay for the authorized user’s purchases.