Being an authorized user can really pay off if you play your cards right.
- Adding an authorized user can make it easier to fulfill a registration bonus requirement.
- Some cards may offer additional rewards just for adding an authorized user.
- Authorized users can take advantage of many of the benefits of travel rewards cards.
Authorized credit card users are people added to your credit card account who are authorized to make purchases. They get their own card linked to the account and can swipe or tap as if it were their account.
Legally, though, it’s definitely not your account. And that distinction is why adding an authorized user to your credit card is a pretty serious decision.
Authorized users have a lot of power, but no responsibility. They can spend, spend, spend, but they are not required to pay anything. All financial responsibility for the balance, legally speaking, rests with you, the primary cardholder.
However, assuming you can trust your authorized user not to abuse the privilege, there are definitely times when adding an authorized user not only makes sense, but might be a very good idea.
1. Makes it easier to earn a signup bonus
This probably applies to couples, especially those who already share finances. But it could also work with a friend or family member that you really trust.
Most credit card signup bonuses have a spending requirement that you must meet to earn the bonus. If you can accomplish it with a single user, great. But in most couples, the purchases are made by both partners.
Making your member an authorized user means your card spend will count toward your overall spend requirement. Even better, that spend will also earn you the same purchase rewards you earn as a primary cardholder.
In some cases, it may be better for both partners to get their own card, rather than essentially sharing one account. For example, if you can meet two sign-up bonus requirements, then having each person open an account means doubling the bonus. This may also be the case if the card has a limit on certain reward categories and you want to double the rewards.
2. You get a bonus rewards offer
From time to time, you can get what is essentially a sign-up bonus for adding an authorized user to your existing account. Some offers may give you a bonus just for adding a person, while others will give you a bonus when your authorized user reaches a certain spending requirement.
For example, you might see something like this in your account: “Add an authorized user and earn 10,000 points when you spend $2,000 in the first three months.”
These bonuses can be very useful, especially if it’s a card you’d spend on anyway. If you have a great grocery rewards card, for example, and your partner does the shopping.
However, keep in mind the opportunity cost. If you could earn more rewards with that $2,000 by putting it on a different card, perhaps with a regular signup bonus worth 10,000+ points, then wasting it on an authorized user bonus could mean losing rewards.
Many of the best rewards cards offer more than rewards; they also come with additional perks. This is especially prevalent when it comes to travel rewards cards. And many of these benefits can be enjoyed not only by the primary cardholder, but also by any authorized user.
One of the most popular perks of travel rewards cards is probably airport lounge access. Airport lounge visits can easily cost $35 to $50 each, so this perk can save you a ton of money if you travel even a few times a year.
While many credit card lounge programs allow you to bring guests, there is usually a limit to how many you can bring. You will also have to be present. By making your member an authorized user, they can enjoy the same room access as you, including their own guest passes. They will also be able to access the lounge while traveling, even if you are not traveling with them.
Beyond lounge access, you can also double certain statement credits. Some cards that offer TSA PreCheck or Global Entry credits, for example, offer the credits to both the primary cardholder and any authorized user.
4. It will help them boost a thin credit file
If you’re thinking of adding your teen or college kid to your card, this is probably why. While authorized users are not legally responsible for a credit card account, many issuers will still report card balance and history to credit bureaus for any user listed on the account, including authorized users.
For people with a strong credit history, an authorized user account won’t have much of an impact. But if you have poor credit — that is, little or no credit history — being an authorized user on a previous account with a positive payment history can help improve your credit. It probably won’t take you from average credit to excellent credit, but it can certainly help you skip the bottom rung of the card ladder.
Here is the time to reiterate the importance of adding only responsible people to your account. If your teen hasn’t learned some important financial basics, like not maxing out their parents’ credit card, you may want to think twice before handing them the keys to the kingdom.
In addition to considering whether your authorized user is trustworthy, there is another important consideration: cost. If your card doesn’t have an annual fee, then adding authorized users is probably free.
But if your card charges you an annual fee, there’s a good chance it also charges an annual fee for its authorized users. This is particularly common with fancy travel rewards cards with many perks. They tend to charge an annual fee for authorized users that can be as high as $175 each.
While these fees may be worth it, unlimited lounge access can easily be worth more than $175 if you use it enough, it’s worth crunching the numbers. If you (both of you) don’t get your money’s worth with the extra fee, reconsider your options.
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