Avoid sharing credit with elderly parents

You're better off giving cash than giving them your plastic

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 for the CreditCards.com expert

Dear To Her Credit,
My elderly mother declared bankruptcy a few years ago and cannot get a credit card on her own now, so I would like to add her as an authorized user on my credit card account. I will be overseeing all of her finances and ensuring that the account is paid on time, so that's not a problem. However, I need to know if adding her to my account will negatively impact my credit score solely due to the bankruptcy issue. -- Gina

Answer for the CreditCards.com expert

Dear Gina,
No, adding your mom as an  authorized user to your card won't immediately affect your score. Her past credit problems or her bankruptcy don't show up on your  credit history just because she's an authorized user on your account.

However, in the long term, adding her to your account could have other unintended consequences. I don't recommend it.

The problem is co-mingling her finances with yours. You can't imagine how messy things can get doing that!

First, if your mother declared bankruptcy a few years ago, it's possible managing money isn't her strong point. As she gets older, she may have a harder time understanding financial limitations and remembering things. If she has your card, she could go on a spending binge. She'll have all the spending power, and you'll have all the responsibility for the credit card bill.

If you're using her income to pay your credit card bill, even though it's for her expenses, your brothers or sisters may look askance at that. "Not in our family," you think? Don't count on it. Keep your finances simple and separate if you want to keep the family peace.

Tax issues are another problem. If you take care of your mother to such a degree that you may qualify to take a dependency exemption for her on your tax return, you'll need to be able to show what expenses of hers you paid for. If it's all mixed up on a single credit card with your expenses, that's going to be difficult.

Further, if your mother passes away when you have a balance due to purchases she has made, you won't be able to directly use her money to pay it off. You'll have to wait until her estate is settled and hope for the best. In the meantime, you're carrying a balance on your card, steadily racking up interest expense.

A better idea may be for you to help your mother get a secured card or a debit card. With both of these options, she cannot spend more than she has. And even with a recent bankruptcy, she can get them on her own so you don't need to co-mingle funds with her.

If she doesn't have enough money to make it on her own and you can help, find ways to do it without co-mingling funds or exposing yourself to unnecessary risk. You can buy things for her, for example, when you take her shopping. Or you can pay some of her bills directly, or give her a gift card to the drugstore. Adult children sometimes pay ahead for a month's worth of meals at the senior center, or hire a cleaning service for their parents.

Of course, you can always slip her some cash. True, you'll never know where she spent it, like you will if she uses your credit card and you get the bill. On the other hand, she can't spend more than you give her and go over the limit -- either the bank-imposed limit or the one you had in mind.

See related: Credit card authorized users, joint account holders differ, Deceased cardholder's debts can hurt authorized user's credit score

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Updated: 02-19-2019