Can an authorized user transfer debt onto shared card?

Spouse 'consolidates' card debt on their joint card

To Her Credit columnist Sally Herigstad
Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006). She writes "To Her Credit," a weekly reader Q&A column about issues involving women, credit and debt, for CreditCards.com, and also wrote for MSN Money, Interest.com and Bankrate.com, and has guested on Martha Stewart Radio and other programs.

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Question Dear To Her Credit,
Is it fraud if your spouse is an authorized user on your credit card, and then decides to use that card as a consolidation account for other credit cards without your knowledge? – Carrie

Answer

Dear Carrie,
It would certainly feel like fraud, if you made your spouse an authorized user with the expectation he could fill the car with gas occasionally and instead he consolidated all his credit cards onto your account.

In fact, “consolidated” might be the kindest word I could find for what he did. He knowingly took advantage of you. He dumped his debt. He stole your available credit. If you both can’t keep up with the payments now, he will have trashed your good credit history. This is nothing to be taken lightly.

Unfortunately, as an authorized user, he was not breaking any laws by using your credit card the same ways you can. Most credit card companies, with the exception of American Express, don’t generally allow you to set limits on an authorized user account. It’s all or nothing. You could have made him sign an agreement before you gave him a card, but that would just be a contract between both of you. It wouldn’t affect your contract with the credit card company, or your liability for the balance as the primary account holder.

If he took actions that can be rightfully done only by the primary account holder, for instance if he tried to increase your credit limit, that would be different. If he called or contacted the credit card company and asked that the credit limit be raised, say, from $5,000 to $10,000, and they knew he was only an authorized user, they would ask to speak to you. He would have to pretend to be you, or have someone pose as you, to do that successfully. That, of course, would be fraud.

The other problem with this scenario is that he’s not just a friend, or even a boyfriend. He’s your husband. One spouse’s financial decisions affect you sooner or later, even when you try to keep some or all your finances separate. They affect your joint future, as financial irresponsibility on the part of one spouse makes it difficult to reach any of those goals. The responsible spouse can start to feel as if they have assumed a parental role. Finally, if resentment and frustration set in, the financial decisions of one spouse can lead to the end of the relationship.

It would be easy to deal with this situation by going to one of two extremes. The first extreme would be to get very angry. You could yell, threaten and otherwise make life miserable for your husband to teach him a lesson. The other extreme would be to say what’s done is done, and let it go – perhaps with a bit of the silent treatment for a week or two.

The first option would make him feel defensive, and he probably would become angry in return. It may even lead to the end of the relationship. The second option isn’t any better. He gets away with it, for now. You’re angry, and you can’t hide it forever. The relationship is still in peril.

Instead of choosing between anger and resignation, I recommend you and your husband begin to build a better foundation for finances in your marriage. The fact that he was in debt, while you apparently are not, and took advantage of your available credit without permission, makes me think the two of you need to start with basics. A financial education class taken together may be a good place to start, or credit counseling sessions. (You can find a nonprofit agency affiliated with the National Foundation for Credit Counseling or the Financial Counseling Association of America.)

As you learn more about finances as a couple, you can begin to communicate better and work as a team. With communication and teamwork, you can slowly build trust. The two of you can pay off the debt on your credit card, as well as any other nonmortgage debt you have, and move on to other goals.

As bad as discovering your husband used your credit card to consolidate other credit card debt without asking is, this can be a wake-up call for both of you. Let’s hope it helps put you on the path to a better relationship, better finances and a better life.

See related: 6 questions to ask when adding an authorized user to your card, Being authorized user on a maxed-out card: Does it help or hurt score?

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Updated: 11-17-2017