Home > Credit Cards > 6 Things to Do Before You Add Someone to Your Credit Card

Comments 0 Comments

Are you considering adding someone to your credit card as an authorized user? Doing so is easy, but it’s not a decision to be taken lightly. An authorized cardholder is free to make charges to your credit card account, but only the primary cardholder is obligated to pay off the debt. Before adding someone to your account as an authorized cardholder, here are six things to consider.

1. Ask If You Are Making the Right Decision

Because you will be required to pay for any charges made by your authorized cardholders, you should carefully consider if it is a good idea. For example, you shouldn’t make your friends or roommates authorized cardholders just so that they could make occasional charges to your account. And while it can make sense to add a spouse or an immediate family member, it’s generally a bad idea to add a more distant relative who you may not know as well.

2. Look Into Alternatives

Before giving someone the authorization to make virtually unlimited charges to your account, you should consider some alternatives. For example, you could use your credit card to purchase prepaid debit cards, also called gift cards, from Visa, MasterCard or American Express. These products offer much of the security and convenience of credit cards while allowing you to limit the amount in advance. Prepaid reloadable debit cards are another option that can offer you the flexibility to track purchases and reload funds. However, these cards will offer few, if any purchase protection policies and may have higher fees.

3. Have a Conversation With the Authorized User

Before ordering a card for the authorized user, the two of you should sit down and lay out some ground rules. For example, you should decide what the purpose of the card is and what types of purchases you expect them to make and not make. If you are adding employees as authorized users to your small business account, you may want to have them agree to a policy in writing.

4. Set Limits

Part of your conversation with the authorized user should include limits on the amount you expect the card to be used for. For example, you could tell the cardholder that you don’t want him or her to make any purchases over $50 without your permission, or to agree not to make more than $100 per month in charges. At the same time, you should always be aware that any agreements between your and your authorized cardholders do not affect your obligations to the card issuer. The primary cardholder is solely obligated to repay all purchases, not the authorized cardholders.

5. Tell Them to Inform You If the Card Is Lost or Stolen

Authorized cardholders only have the ability to make purchases, they cannot manage the account in any way. If one of your authorized cardholder’s cards becomes lost or stolen, then the primary cardholder must report it and request a replacement. Therefore, it’s important to inform your authorized cardholders that they need to contact you immediately if they have a problem.

6. Make Them Aware of Any Fees 

Authorized cardholders may not be familiar with the terms and conditions of your account. And with young adults who are receiving their first credit card, they might not know much at all about how credit cards work. As a result, you should discuss any fees your card may have, such as cash advance fees and foreign transaction fees. In fact, you may wish to set their card’s cash advance limit to zero if you would prefer not to allow your authorized users to use their card to make costly cash withdrawals.

The Bottom Line 

The ability to add someone to your credit card account is a powerful feature, but it’s also one with potential for abuse. By taking a few prudent steps before adding an authorized cardholder, you can be sure that you’ve done everything possible to make this arrangement work.

Remember, before you add an authorized user, it’s a smart idea to see where your credit stands first so you know if anything needs improvement — and whether you can afford to take the risk of adding someone else to your credit. You can view two of your credit scores, updated every two weeks, for free on Credit.com.

Image: AntonioGuillem

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team