Which card issuer allows different credit limits for multiple users?

To Her Credit with Sally Herigstad

Sally Herigstad is a certified public accountant and the author of “Help! I Can't Pay My Bills: Surviving a Financial Crisis.” She writes “To Her Credit,” a weekly reader Q&A column about issues involving women and credit, for CreditCards.com. She also has written for MSN Money and Bankrate.com, and has guested on Martha Stewart Radio and other programs.

Ask Sally a question, or see if your question has already been answered in the To Her Credit answer archive.

Which card issuers allow you to set credit limits for multiple authorized users?

Most card issuers don’t allow you to set individual spending limits for authorized users; American Express is the exception.
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Dear To Her Credit,
Is it possible to set individual limits on our card for all users of the card? I see that you can set a limit for one additional user, however, my husband and I want to set limits for each of our kids as users of the card. – Debbie

Dear Debbie,
Most credit card companies do not allow you to set a limit on how much each authorized user can spend. American Express is an exception – it allows you to set spending limits for an authorized user. If you have more than one authorized user, you can set a limit for each one.

According to American Express, the spending limits are per billing cycle, per user. If you change the spending limit, it can take a billing cycle for the new limit to take effect.

If the user returns items she purchased, her spending limit does not take that into consideration. So, if you want to go this route and your current card is not an American Express card, you may want to apply for one.

Setting limits on how much each user can spend is better than no limits at all. However, in my opinion – admittedly influenced by the number of letters from readers telling stories of shared credit cards gone bad – the fewer users on one credit card, the better.

If you feel the need to limit the amount each authorized user can spend on the card, that may mean they shouldn’t be on your card.

See related: What to do when an authorized user goes rogue

Why you may want to rethink multiple authorized users

I can think of several reasons you shouldn’t put other people on your card. Here are some reasons you should think twice before you make that move:

  • Keeping track of who has spent what can get messy.
    Even if you get everyone to adhere to a spending limit each month, it can become increasingly difficult to  determine how much of a carried-forward balance belongs to each user if the balance is not paid off every month, including interest charges.

  • Starting to use credit is a learning experience.
    Probably every person who uses credit for the first time is astounded at how quickly a few little expenditures add up. I know I was (and sometimes I still am). Better to have new authorized users experience this on their own card – not yours.

  • Your relationships could suffer.
    Commingling finances, especially debt, can add stress and cause misunderstandings. If people have their own credit cards or checking accounts and spend more than they intended, they may get angry at the bank or at themselves. They can hardly blame you. But if it’s your card, and if interest charges start to pile up, you’ll be the one putting pressure on them to pay.

  • They can, and should, build their own credit history and score.
    If they are at least age 18 and have a steady income, they can start with a secured card, or a department store card with a low limit, if necessary. If they are under 18, are you sure they really need a card?

If you really feel your kids should have access to your credit card for emergencies, consider getting a new card and, once approved, request a low credit limit and add one authorized user per card.

Yes, it’s a bit more trouble to make sure all the cards are paid every month, but at least you’ll know exactly how much each user has spent. If they run up balances they can’t pay off, and the interest expense kicks in, you and the spenders will know who needs to pay it off.

Another alternative is to open checking accounts for each child, and get debit cards associated with those accounts. You could deposit a certain amount of money each month (or let them deposit any earned money) and request that no overdrafts be allowed. Once the money is gone, any debit card charges will be denied.

Finally, there are always prepaid cards you could provide each child with which would also limit any overspending.

It’s good that you are thinking of ways to help your kids start using credit responsibly. You’re on the right track by letting them experience credit usage, with limits.

However, if you decide to help them get started, try to keep things simple and clear, and make sure you don’t have to play the “bad guy” when everything doesn’t go exactly as planned.

 


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Updated: 10-20-2018