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The Risk and Rewards of Adding an Authorized User to Your Account

If youق€™re trying to decide whether or not itق€™s a good idea to add someone as an authorized user to your credit card, youق€™ll need to look at the overall pros and cons. Depending on your own unique situation, you will be able to decide whether or not doing so would be the right financial move. Before rushing into adding your fiancأ�e, child or other person to your account, first read the benefits and pitfalls associated with doing so.

Pro: You Can Earn Points for Another Personق€™s Spend

By adding someone to your credit card account, each time he or she spends money; you could reap the rewards in the form of points. With cards like American Express and Chase, you can have the points earned transferred over to the authorized userق€™s frequent flyer account. If they decide not to use the points, you can use them for yourself. Just make sure that the other person isnق€™t one to max out the credit limit, so that you arenق€™t left with too much of anything each month.

Con: The Fees Can Be Over the Top

Pay close attention to the fees that are associated with adding a cardholder to your account. Browse the Terms and Conditions of your card application to see what the exclusions are. Some banks will allow you to add authorized users free of charge, while others will charge an annual fee per person you add as a cardholder. This can sometimes be as high as $175 per year to start, plus $175 per person you add. This could outweigh the advantage of receiving bonus points.

Pro: You Can Meet Spend Thresholds Easier

When you reach a specific spend threshold, valuable rewards can be unlocked. By adding a cardholder to your account, whatever is spent on either card goes to the main account, which counts towards the threshold. This makes meeting the required spend levels a lot easier. Some of the perks you may be able to earn include companion tickets. There are different thresholds set by different card companies. For instance, some will have a $40,000 required spend per year. The bonuses can sometimes be cash back or just points.

Con: Your Credit Could Suffer

If the person you add to your account doesnق€™t pay his or her bills on time, this will reflect negatively on your credit score. So if they didnق€™t pay up, you will be responsible for the bill. Youق€™ll have to decide either to take on the debt or allow it to blemish your credit report. Be especially careful if you have cards like the Chase Ink Bold, which requires you to pay off your bill in full each month. Knowing the credit worthiness of the person youق€™re adding to your account is important, so donق€™t be afraid to ask for account statements as proof. This should be discussed well before you place them on your credit card account.

Pro: Spouse with Credit Challenges Can Build their Credit

If you have a spouse or partner who lacks credit worthiness due to poor credit or no credit, they will have a hard time getting approved for a credit card. Adding him or her to your credit account can instead be used as a way to rebuild their credit, while at the same time earning points. This can also be used to help your children build their credit score, so that they can get approved for credit cards when the time comes for them to apply. You can add your teenager to help them learn about financial responsibility or a college student who is venturing out into the world for the first time and may need access to money.

Pro: The Added Card Holder Can Still Get Their Own Card

Just because you add someone to your credit card account doesnق€™t mean that he or she canق€™t open up their own separate account. As long as they have good credit, this can be accomplished. This means they can have two cards with the same institution, which allows him or her to take advantage of the sign-up bonuses that are offered.

Pro: Two Cards Equals Four Potential Bonuses

By having two credit cards on your account, you can get access to two larger bonuses ق€" if you were to meet the spend threshold. You can then add each other to your own card as an authorized user to double to the potential bonus points. This is something that can be done with partners and spouses.

Pro: You can Send Transferable Points to their Account

Before, transferable points were able to be sent to anyone who has an account with the same institution, but companies like Chase and American Express now only allow you to send points to authorized users, spouses or employees. However, these points can only be added to their hotel or frequent flyer accounts. ThankYou accounts from Citi can be used to transfer points to anyone, but it has to be sent and used before a specific expiration date. So if youق€™re big on giving point love, then this feature could be used when you add an authorized user to your account.

Adding an authorized user to your account is a great way to give a lending hand to someone needing credit help or just to get access to double the rewards. Keep in mind that you should only authorize someone who is going to use the card responsibly and have the bills paid on time because this will affect your credit.