Adding an authorized user to your credit card can be a good move for you and the authorized user. The authorized user can benefit from conveniently accessing credit, and you can earn more rewards on your credit with their added expenditures. However, adding an authorized user comes with some risks. Before adding another person to your account, consider both the potential benefits and drawbacks involved.
Key Points You Should Know When Adding An Authorized User
- The primary cardholder is wholly responsible for the card, while the authorized user can make purchases without being liable for the debt.
- Adding an authorized user to your credit card can provide some advantages, but it carries more risks such financial liability and potential negative impacts on your credit scores.
- To add an authorized user, the primary cardholder must either use online banking or contact the credit card provider and provide necessary information on the authorized user.
How To Add An Authorized User To A Credit Card
To add an authorized user to your credit card, follow these steps:
Step 1: Check Eligibility Requirements
Find out what your credit card provider’s requirements are for adding an authorized user to your credit card account. For instance, there may be age requirements for the authorized user.
Similarly, be sure to review to costs involved with adding an additional cardholder. Most credit card providers charge between $30 to $70, though some may be more or less depending on the card.
Step 2: Collect Required Information
Gather all necessary details of the individual you’re adding as an authorized user on your card, including the following:
- Their full name
- Their date of birth
- Their Social Security Number (SIN)
Step 3: Call Your Credit Card Provider
Speak with your credit card provider and provide them with your request and all necessary information to add another person to your account as an authorized user. You can do this in a few ways, such as over the phone or through a secure online form.
Step 4: Review The Terms And Conditions
Make sure you and the person you’re adding as an authorized user fully understand your responsibilities. In particular, make sure you’re aware of the possible risks associated with adding an authorized user to your account, including how your credit may be affected.
Step 5: Receive The Authorized User Card
After approval, the person will be added as an authorized user and you will receive their credit card linked to your account. They can then start using the card for purchases.
Who Can You Add As An Authorized User?
Anyone can be added as an authorized user on a credit card, including friends, family members, business partners, or employees, depending on the credit card provider’s criteria. For example, there may be specific age requirements to be added as an authorized user.
| Note: There may be a fee for adding an additional cardholder. |
Primary User vs. Authorized Users vs. Joint Credit Card Users
To understand what it means to add an authorized user, you need a full picture of each person’s role relative to the account:
Who Is The Primary Cardholder?
The primary holder is the person who holds the account. This individual opened the credit card account and is the person responsible for the payments. The credit cycle of the card impacts the credit profile of the primary holder.
What Are Authorized Users?
An authorized user is someone who is added to an existing credit card account by the primary cardholder. This allows the authorized user to use the card to make purchases. The primary cardholder is still responsible for making all credit card payments.
What Is A Joint Account Holder?
A joint account holder (a.k.a., secondary cardholder or co-borrower) applies for the credit card with another user. Both are referred to as co-borrowers. As a result, both parties must meet the financial criteria needed to qualify for the account.
Moreover, all the account holders are fully responsible for the money owed on the credit account. This means that the liability applies, in full, to both parties linked to the account. Both are equally responsible for making payments and will incur the same penalties upon default.
Learn more: Pros and Cons of Joint Bank Accounts
Major Differences Between An Authorized User And A Secondary Cardholder
| Secondary Cardholder | Authorized User | |
| Who is responsible for the money owed on the credit card? | All users are responsible for the card balance. | The authorized user is not held responsible for the debt. |
| Do approval requirements need to be met? | Yes, the requirements must be met. | No, authorized users need not meet the criteria. |
| Can you build credit? | Yes, if properly used, the card can build credit. | Depends on the credit card issuer |
| Who can be a user? | A co-applicant who qualifies for the credit card independently. | Family members or individuals who meet the creditor’s minimum age requirement. |
Pros And Cons Of Adding An Authorized User To A Credit Card For The Primary Cardholder
The primary cardholder has a lot to consider before adding an authorized user to their credit account. As with any financial decision, it comes with some inherent risks and some potential advantages. The primary cardholder should consider these on a case-by-case basis.
Pros
- Earn More Points. The more the card is used, the more points will accrue. This is particularly useful for card arrangements designed with a lot of incentives.
- Money Management. Cardholders can track and limit the authorized user’s spending. This lends an opportunity to budget and analyze spending patterns, especially for parents trying to teach their children about credit and money management.
- Convenience. This arrangement allows family members to share the credit card for joint expenses.
Cons
- Financial Liability. The account holder is fully responsible for paying off the balance owed on the card, regardless of whether the authorized user spent the money. This adds a level of risk and, depending on the situation, may require a lot of oversight.
- Potential Effect On Credit. Late payments or high balances can hurt the primary cardholder’s credit score.
- Additional Fees. Some credit card providers charge fees for adding authorized users.
Which Card Can You Add An Authorized User?
Not all credit cards allow authorized users. Each credit card issuer has its own specific policies regarding this situation. You’ll need to find out from your specific credit card provider what their rules are surrounding the addition of an authorized user to your credit card account.
That said, the following credit cards in Canada allow authorized users to be added to primary cardholder accounts:
| Authorized User Allowed | Cost | ||
| Tangerine Money-Back Credit Card | Yes | $0 | Learn More |
| BRIM Mastercard | Yes | $0 | Learn More |
| TD Aeroplan Visa Infinite Privilege Card | Yes | $199 | Learn More |
How To Remove Authorized User From Credit Card
The process of removing an authorized user from your credit card may vary by creditor, but it typically involves the following steps:
Step 1: Contact Your Credit Card Provider
Speak with your credit card issuer to request to have the authorized user removed from your account. You can usually find their contact information on the back of your credit card.
Step 2: Provide The Necessary Information
You’ll need to provide the credit card issuer with the authorized user’s name and other information.
Step 3: Confirm Removal Of The Authorized User
Confirm with the credit card issuer that the authorized user’s name and details have been removed from your account. Make sure that they’ll no longer be able to use your card to make charges. These changes usually take effect right away.
Bottom Line
You may be doing a loved one a favour by adding them as an authorized user to your credit card account. However, it’s essential that you understand the potential risks that come with doing so, such as excessive charges made to your card or the potential for your credit score to be negatively affected. Communicate your expectations to the person before adding them as an authorized user to minimize your risk.
