Guide to sharing credit card rewards with authorized users
You can negotiate a plan for using the points you've earned with the primary cardholder – here's how
Making complex credit topics simple
Need a credit score boost? Consider joining someone else’s credit card as an authorized user.
Authorized-user accounts show up on your credit report. When the primary cardholder has a solid history of paying on time and keeping credit utilization low that can add points to their score – and yours.
You might also be able to earn cash, points or miles when you spend. But, earning rewards as an authorized user doesn’t mean you’re automatically entitled to use them.
Here’s how to navigate the rewards waters as an authorized user.
Sharing rewards as an authorized user: A quick guide
- Know what authorized users can and can't do.
- Discuss rewards redemptions before signing on.
- Choose options for sharing rewards.
- Consider setting a spending limit.
- Keep track of authorized user-generated rewards.
- Maximize rewards as an authorized user.
- Consider a joint account for further flexibility.
Know what authorized users can and can’t do
If you’re considering becoming an authorized user, get to know the rules first.
- You can use someone else’s credit card account to make purchases. But you can’t make changes to their account, such as requesting a higher credit line.
- You’re not responsible for the debt – nor the fees associated with the account since you don’t own it. But you also don’t own any rewards earned by yourself or the primary cardholder.
“The account owner has the responsibility for any debt that occurs. The primary cardholder’s good credit was used to get the card as well,” says personal finance and credit expert Beverly Harzog. “It’s a nice gesture to offer the authorized user some of the rewards, but it shouldn’t be expected.”
Jake Serfas, lead financial strategist at OWRS in Baltimore, says authorized users should focus on the credit benefits first and rewards second.
“Being an authorized user is a reward in itself,” says Serfas, because you’re leveraging someone else’s good credit history to build up your own score.
That’s important if you’re focused on improving your credit so you can get a car loan or buy a home.
Discuss rewards redemptions before signing on
The best time to discuss rewards with the primary cardholder is before you ever start spending with the card. Laying the ground rules early can help avoid conflicts later, and there are a few ways to approach it.
“Deciding how to divvy up rewards fairly can depend on why the authorized user is linked to the card in the first place,” says Serfas.
- If you’re being added to someone’s card to build credit and you don’t plan to use it that often, it’s unreasonable to expect to share rewards evenly.
- The same goes if you’re making purchases every month, but you’re not paying anything toward the balance.
In the case where a parent takes care of the credit card bill each month for a teenager or young adult, since the authorized user isn't contributing anything toward the payment they shouldn't expect any rewards in return.
Things might be different if you’re actively paying on the balance.
Choose options for sharing rewards with an authorized user
Personal finance expert and speaker Harrine Freeman suggests a 70/30 split, with the primary cardholder able to redeem 70 percent of rewards and 30 percent going to the authorized user.
Or, you could simply ask the primary cardholder to earmark the rewards you’ve earned on the account for your use.
Harzog proposes an alternative to direct access for primary cardholders.
“If you do want to offer rewards, use your points or miles to buy a gift card for your authorized user,” she says, “or maybe even give them a free airline ticket with your miles.”
As both authorized user and primary cardholder discuss how rewards will be shared, they may also want to lay out how other perks and responsibilities that come with using a rewards credit card will be split. These may include:
- Annual fee – if the card shared charges one.
- Sign-up bonus – if the card is shared from the opening of the account, and offers one.
- Travel benefits – examples include free nights in the case of hotel cards, TSA Precheck credits in the case of travel cards, and annual travel credits in the case of some premium rewards cards.
- Rewards earned through shopping portals, dining programs and any other loyalty program associated with the card.
- Discounts and extra bonuses via card-linked offers and other special promotions.
Consider setting a spending limit
Nothing can sour a relationship faster than running up a bunch of debt on someone else’s credit card and leaving them holding the bag.
As an authorized user, you observe a self-imposed spending limit each month, say $500, so the primary cardholder’s balance doesn’t spiral out of control.
The account owner may also have the power to set a spending limit of their own.
- Freeman points out that American Express allows account owners to set spending caps for authorized users.
- This feature is also available with Chase small business credit cards – including Ink Business Unlimited Credit Card, Ink Business Cash Credit Card and Ink Business Preferred Credit Card.
- The Costco Anywhere Visa Card by Citi also lets you customize spending limits on authorized-user cards.
Freeman suggests some additional pointers for managing authorized user spending as the primary cardholder:
- Set up text and email alerts with the credit card company. Alerts can make it easier to track purchases and overall balances.
- Keep paper or digital receipts for authorized-user purchases. This can help with sorting out who’s responsible for which charges and it also comes in handy if you need to dispute a purchase.
See related: When an authorized user goes rogue: What to do
Keep track of rewards
If you’re sharing rewards as an authorized user, you need to stay on top of what you’re earning. An app can help you do that.
Harzog recommends AwardWallet for tracking rewards.
“There’s a free version that allows you to share reward balances,” she says. “You can also track your rewards balances and get notifications when your miles are about to expire.”
Remember, however, that the primary cardholder would need to create an AwardWallet account and share the login information with you.
Here are some other apps you can use to track credit card and loyalty program rewards:
See related: 7 ways to track your reward cards like a pro
Maximize rewards as an authorized user
While you’re checking out apps, be sure to look for ones that can help you maximize rewards on authorized user spending.
“Use tools such as Ibotta, MyPoints, Swagbucks or Ebates,” says Freeman.
These sites can offer cash or rewards on purchases, on top of what you’re earning with your card. Other sites to check out include:
Freeman offers some tips for using these sites as an authorized user.
“Determine the payout method, payment frequency, waiting period, payment threshold and other requirements,” she says.
These and any other conditions should be discussed with the primary holder in advance. Transparency is key to a healthy relationship between authorized user and primary holder.
Tip: If you’re overwhelmed by all the app options, use a site such as Cashback Monitor to keep track of where the best rewards deals are online.
Consider a joint account for more flexibility
The primary cardholder has the right to add you on to their account, but they have they final say on when you get to use it.
“Depending on the agreement, you can still be an authorized user but never actually have access to the card,” says Serfas.
Joint cardholders don’t have those same roadblocks.
As an account co-owner, they can make purchases, earn rewards and redeem them. Being a joint cardholder can help improve your credit if you’re diligent about paying on time and keeping your balance low.
You are, however, equally responsible for the debt associated with the card. So, weigh the pros and cons carefully before trading up from authorized user status to a joint account. Know that joint cards are hard to find these day, as most major issuers don't offer them anymore, except for Bank of America and Wells Fargo and certain credit unions.
Tip: If you are already in a position to be a primary cardholder – say, you're older than 21 and/or you have your own source of income – you may want to consider applying for your own first card.”
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