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Account management

Differences between credit card joint account holder, authorized user and co-signer

Your access to the account – and liability for the balance – will vary based on your status

Summary

If you share a credit card with another person, it’s important to know if you’re a joint account holder, authorized user or co-signer. It will determine how much control you have over the account and your liability for the balance.

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If you share credit another person, your account status is just as important as the credit line and the interest rate.

That’s because it determines how much control you have over the account, your responsibility for the bill and its impact on your credit history.

Unless you opened the account alone (which makes you a primary account holder), your status with shared accounts is likely to fall into one of three categories: joint account holder, authorized user or co-signer

These account statuses come with different access and responsibilities for the debt. Here’s what you need to know:

Joint account holders

This label “just means two parties can apply for a card together,” says Mike McLain, senior federal compliance counsel for the Credit Union National Association.

When joint account holders open the account, they each fill out applications and have their credit checked. They have equal access to the credit line or loan, and each is individually responsible for the entire debt. And the credit agreement or loan application should confirm that status.

A joint account holder has all the rights and responsibilities of a primary account holder. You’ll have your own card, and full access to account information. You can request increases and decreases in the credit line. You can also close the account. And, if the issuer reports to the credit bureaus, they must include the account on the credit reports of all joint account holders.

See related: Should you add your partner as a joint account holder on a credit card?

Each account holder is also completely responsible for the entire debt – not just their own charges of 50% of the total, says McLain.

Ending the relationship with your joint account holder doesn’t dissolve your responsibility for the account. Even if a divorce court or mediation agreement assigns the card or card debt to a former partner, that doesn’t erase your initial agreement with the card issuer.

“Your divorce judgement does not bind the credit issuer,” says Chi Chi Wu, staff attorney for the National Consumer Law Center.

See related: How can I remove an old joint credit card account from my credit report?

Authorized users

Authorized users can use the credit card, but they won’t receive bills and don’t have any control over the account. They can’t request changes to the credit line or add other authorized users. In general, authorized users can request to have themselves removed from credit card accounts by contacting the issuer.

The primary account holder is responsible for paying the balance and can see all spending on the card, so they’ll be able to see how much the authorized user has spent, as well as when and where they shopped.

For the most part, authorized users aren’t responsible for the bills. But in certain circumstances, they could possibly be held responsible for their own charges.

“If it’s something they’ve incurred, there may be state laws that make them liable,” says Wu.

To become an authorized user, a primary or joint account holder must notify the issuer to add the individual as an authorized user on the account. And the issuer will often send a separate card for the authorized user.

This account status is common among family members. Parents might make their children authorized users to give them access to a credit card for an emergency or help them build a credit history.

Many issuers include authorized users when reporting account use to the credit bureaus, says Nessa Feddis, senior vice president and counsel for the American Bankers Association.

If the account is paid on time and managed well, that would help the authorized user build a healthy credit history and credit score.

“The problem there is if the main user is a bad risk, it could hurt the authorized user,” Feddis says.

Co-signers

A co-signer doesn’t have any control over the account, but is responsible to pay the balance if the account holder doesn’t pay.

Though many card issuers don’t allow co-signers, the ones that do might require a co-signer if an applicant doesn’t have enough income to qualify for a credit line.

Once you’ve become a co-signer, it’s virtually impossible to reverse the decision. You’ll likely be a cosigner on the account until the primary cardholder closes it and pays the balance in full. This even applies to accounts you opened for a child.

“What co-signers might not realize, once you’ve co-signed for a credit card, you’re a co-signer even after that person becomes 21,” says Wu.

The decision to co-sign for someone is not one to make lightly. Every situation is different. But if a bank or lender decides an applicant is a high enough risk that they can’t qualify for credit on their own, that should give any co-signer serious pause.

Since you won’t have control over the account, but you’ll be responsible for the balance, it could put your finances and credit score at risk.

See related: 10 ways co-signers can protect themselves

Final thoughts

If you want to help someone learn to manage credit and build a history, consider making them an authorized user or joint account holder instead of co-signing. This way, you can track their spending habits and maintain some control over the account.

And if you have poor or limited credit, these options can help you build a credit history. But that assumes someone with a strong credit history and responsible spending habits is willing to help you. Otherwise, it might be better to look at other ways to build credit.

See related: How to build credit without a credit card

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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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