How Do Authorized Users On Credit Cards Work?

An authorized user is an official-sounding way of referring to someone you add to your credit card. For example, an authorized user might be your spouse, partner, or teenage child.

As an authorized user, they enjoy certain benefits – like access to credit and the opportunity to improve their credit score. That said, authorized users can be liabilities. We’ll explain the benefits of adding an authorized user and cover the drawbacks of sharing your account so that you can decide whether it’s right for you.

What is an authorized user on a credit card?

An authorized user is someone that you allow to use your credit card account. You’ll typically inform the bank that you’d like to add someone – like your partner or child – and they’ll issue that person with a card.

Since the card is tied to your account, the authorized user has access to the same shared credit limit. But since they aren’t the primary cardholder, they’re not liable for making payments. That responsibility falls on you.

Authorized user vs. joint account

There are similarities between an authorized user and a joint account. Both are accounts where the funds (or credit) are shared between the individuals who have access.

With a joint account, however, both users are responsible for paying account fees and making on-time payments. This differs from an authorized user, who can use the credit card but isn’t on the hook for repayment.

Pros and cons of authorized users on credit cards

Adding an authorized user requires serious consideration. Here are some potential benefits and drawbacks of adding someone to your credit card account.

• Provides access to credit: If someone can’t qualify for credit on their own, making them an authorized user could help them gain access to credit. If they already have a credit card or two, adding them to your account increases their overall credit limit (which could help their credit utilization ratio).
• Improved credit score: Authorized users are usually reported to the two major credit bureaus. As long as you make payments on time, authorized users should see their credit scores improve.
• Streamlined finances: The primary account user can easily log into the account and track purchases made by the authorized user. This can be handy if you share a household budget.

• Authorized user fee: Depending on your bank or card issuer, you might be charged a fee (usually $50 to $60, though it depends on the card) for adding an authorized user to the account.
• Primary cardholder is responsible for repayment: The authorized user isn’t financially liable for paying off the purchases they charge to the card.
• Lower credit score: If one of the cardholders exceeds the credit limit or fails to make payments, everyone’s credit score can suffer.

Does an authorized user affect your credit score?

Giving an authorized user access to your account can impact your credit score.

If the authorized user goes over your spending limit, you could certainly see your credit score take a hit. Your score might also drop if you’re unable to make payments – like if the authorized user spends too much on the card and doesn’t cover their portion of the costs.

Exceeding your credit limit and missing payments are actions typically reported to the credit bureau. This is a key consideration since the account is in your name; you’re financially liable so your score will take the hit.

Be aware that those are the worst-case scenarios. If your authorized user is trustworthy and responsible, adding them to the account shouldn’t negatively impact your credit score.

Responsibilities of an authorized user

The primary cardholder is ultimately financially liable for the credit card account, but the authorized user should have responsibilities, too.

Here are a few expectations that you might decide on together:

• Sticking to a spending limit: If you want to place limits on how much the user can charge in a given month, make it clear. Otherwise, let them know the account credit limit so that the two of you don’t exceed it.
• Making payments for purchases: To ensure the account balance is paid on time, set a due date for monthly payments. In some cases, your authorized user might be able to make payments directly from their bank account. In other cases, it might be easiest for them to simply transfer you the money to make the payment.
• Checking the account: Credit card issuers usually allow authorized users to log into the account to track purchases and monitor spending. Help your authorized user get set up so they can monitor their credit card use.

How to add an authorized user to a credit card

Once you’re sure that you and the person you want to add are on the same page about finances, reach out to your credit card issuer. Some issuers allow you to add an authorized user online while others require you to call. You’ll need:

• Full name of the authorized user
• Address
• Date of birth
• Social insurance number

If you want to set a spending limit for the authorized user, ask your issuer if this is an option. If it’s not, you’ll need to clearly communicate spending limits with the user. While you’re at it, you should also discuss how they’ll pay for the purchases they make.

The credit card issuer will send a credit card to your authorized user. Once they activate the card, they can access the credit.

How to remove an authorized user from your credit card

Some credit card issuers allow you to log into your account and remove the user yourself, or chat with an agent who can process the request.

If you don’t have the online option, call the customer service number on the back of your credit card and ask an agent to remove the authorized user.

Pro Tip: If you have the banking app, you might be able to quickly remove the authorized user by accessing the account on your phone.

FAQ

Do authorized card users build credit?

Yes, adding an authorized user can be a great way to help someone with no credit history build credit. As long as the account remains in good standing, using the card can favourably impact an authorized user’s credit score. On the other hand, their credit score can take a hit if the primary cardholder misses payments or exceeds their credit limit.

Can an authorized user pay a credit card?

The primary cardholder is typically the person paying the bills but if the authorized user can set the account up as a payee on their online banking, they can easily make payments. Alternatively, the authorized user could transfer money to the primary cardholder, who then uses the funds to pay the card.

Am I responsible for the debt if I am an authorized user on a credit card?

Technically, no. The primary cardholder is the one ultimately responsible for paying the debt. Keep in mind that if the primary cardholder doesn’t make payments, your credit score can also suffer.

Does removing someone as an authorized user hurt their credit?

Removing someone as an authorized user can hurt their credit if they don’t have other lines of credit being favourably reported to the credit bureaus. It can also hurt their credit utilization ratio.