– Credit Card With Authorized User –
Credit Card With Authorized User: Well it’s certainly not a substitute for building up your own credit history or credit score. Becoming an authorized user on someone else’s credit card can be a simple and effective tactic if you’re still working to establish your credit.
It may be a good way to give your credit a nice boost as you’re getting started. Your credit can also be hurt if the primary account holder doesn’t stay on top of their payments.
Before pulling the plug, here’s what you need to know about becoming an authorized user;
- What is a Credit Card Authorized User?
- Break Down of a Credit Card Authorized User
- Becoming an Authorized User
- Best Authorized User Credit Cards
What is a Credit Card Authorized User?
A credit card authorized a user is a person who has permission to use another person’s credit card but isn’t legally responsible for paying the bill. For personal cards, authorized users are usually family members, such as a child or a spouse.
Depending on the credit card issuer, some credit card companies provide a unique card to authorized users linked to the holder of the primary account. Others simply authorize a credit card authorized user to make purchases with the primary account holder’s card.
Break Down of a Credit Card Authorized User
A credit card authorized user is not liable for the payments that they charge to the credit card. Though the actual cardholder usually expects the authorized user to pay the costs of anything they purchase on the card, that is ultimately an agreement between the cardholder and the authorized user.
For example, if one member of a couple is an authorized user on the other’s credit card and the couple splits up, the cardholder is legally responsible for covering any charges on the card if the authorized user refuses to make the payments.
Authorized users sometimes opt to simply pay the cardholder any money owed on the card, so that the cardholder can pay the balance, or the cardholder gives them access to the card’s account so that the authorized user can make the payments themselves.
In some cases, such as when a child is an authorized user, the cardholder simply pays the entire balance on their own.
Becoming an Authorized User
Many people become authorized users of other people’s credit cards as a way to build or rebuild credit. If a person has no credit, or if their credit score is particularly low, they can potentially raise their credit score by becoming an authorized user of a credit card that the card’s holder uses responsibly.
However, not every credit card allows authorized users, and of those that do, not all of them report data from authorized users to a credit reporting agency–which is crucial to building your credit.
However, some do, which is why you have to do your due diligence before asking to become an authorized user.
Keep the following recommendations in mind:
- As an authorized user, the primary user is responsible for paying all charges at the end of the billing period. But both cards are technically on the same account, and all charges will appear together.
- If the primary cardholder defaults on the monthly bill, however, your credit might take a hit.
- Enter into an authorized user situation carefully, consider the type of credit card involved (including the interest rate and potential perks), as well as the history of the primary cardholder. Only choose to enter into an authorized user agreement with someone who already has a long and excellent credit history.
- Ensure that you spend responsibly to keep your financial relationship with that person in good standing. Arguments over money end many friendly and familiar relations
Best Authorized User Credit Cards
Most major credit card companies do report the credit data of the authorized user. But local banks and credit unions might report to only one or two credit reporting agencies or none at all.
Don’t be surprised if different credit cards communicate credit information slightly differently for authorized users as well. Before you sign on, ask the issuer about their credit reporting policies for authorized users.
Below are some list of credit card that is most preferable for the authorized user;
American Express Gold Card
- Annual Fee: $250
- APR: No interest as you pay your balance in full each month
- Benefits: Earn 4x points on worldwide dining and U.S. Supermarkets, plus 3x points on travel that you book directly with the airline or on amextravel.com. You’ll get 1x points on all other purchases.
- Category: Rewards Credit Card
All American Express cards report authorized users to the credit reporting agencies. However, it can be beneficial to get more bang for your buck by becoming an authorized user on a card with a rewards program.
The American Express Gold Card offers big rewards for dining and groceries, plus up to $120 per year in statement credits for ordering from Grubhub, Seamless, or other select restaurants, plus a $100 annual travel credit for incidental travel fees.
Chase Sapphire Preferred Card
Unlike some of its competitors, Chase Sapphire Preferred does not have a minimum age requirement for authorized users. This makes it a perfect choice for parents looking to build credit for their children.
They waive the annual fee of $95 for the first year. Chase Sapphire also has no foreign transaction fees, and their rewards transfer 1:1 with other rewards programs.
Citi Prestige Card
- Annual Fee: $495
- APR: 18.99% – 25.99% variable APR
- Benefits: Earn 5x points on air travel and dining, 3x on hotels and cruises, and 1x on other purchases
- Category: Rewards Credit Card
A premium card with premium benefits, the Citi Prestige Card can have a lot to offer both the primary cardholder and the authorized user. The elite travel benefits may come in handy for any avid international traveler.
It even offers a fourth-night stay for free at one of its partnered hotels. The card does come with a hefty annual fee of $495, however.
Be smart before you make your decision about becoming an authorized user. Adding yourself to an account that’s in good standing can get you one step closer to better credit scores.
As well as access to products and rates that you may not have otherwise qualified for.
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