Adding an Authorized User to Your Credit Card
What is an authorized user? Why should I add an authorized user? Can I add my kid as an authorized user? These are some of the questions that have likely come to mind if you are considering adding an authorized user to your credit card. There are pros and cons to adding an authorized user, but if you are trying to help another individual with building credit, adding them to your account could be a quick and simple way to do so.
What is an authorized user?
An authorized user is simply an individual that you are requesting to add to your credit account. The authorized user will have no financial responsibility to pay any debt charged to the card, so before adding an authorized user, be sure the individual you are adding is trustworthy. As a general rule of thumb, I would recommend limiting authorized users to family members, such as your spouse or children. At the end of the day, do not risk your own financial health if there is any doubt regarding the individual you are considering adding. If you choose to add an authorized user, that individual will be issued their own credit card; however, the card is under your account. As a result, you will see both your card and the authorized user’s card appear on your monthly credit card statement.
What are the benefits of adding an authorized user?
When you add an authorized user, that person will benefit (or suffer) from your creditworthiness because the credit account they are added to will begin appearing on the authorized user's credit report. This can be especially helpful if one spouse's credit is better than the other’s or for building credit for your kids. Let’s look at an example. The primary factors that will positively influence your credit score are on-time payments, credit utilization rate, and length of history. In other words, if you never miss a payment, charge less than 30% of the card's available balance, and have maintained the same accounts, then you will have a healthy credit score. As a result, you can add your child as an authorized user; once the credit account populates on their credit report, they will begin to benefit from all your history of responsible credit usage. However, be aware that the reverse is also true. If you miss payments or make other poor credit choices, this will hurt both you and the authorized user. Therefore, you should only add an authorized user if you already have a solid grasp on managing your credit.
It can be difficult for someone with no credit to start building credit, but the best way to build credit is to show that you can properly manage debt. As a result, opening the first credit account is typically the most challenging. This is where adding an authorized user can give your child a leg up. Without the assistance of the primary account holder, your child is ineligible to open a credit card until reaching the age of 18. Even once they reach this age, their application may not be approved since they have no credit history. In such instances, a co-signer is often needed. However, an authorized user can be added before reaching the age of legal adulthood (18). As a result, by the time they reach 18, they will likely have enough credit history established to apply for and receive their own credit card without a co-signer.
What is the minimum age for an authorized user?
An advantage of authorized users is that they do not have to be adults to start building credit. In fact, many credit card providers have no minimum age requirements to add an authorized user, but even those that do allow you to add your child as an authorized user in their early teens. Here are the age requirements to add authorized users for some of the common credit card providers:
Minimum Age for Authorized Users:
- American Express: 13 years old
- Bank of America: no minimum age
- Capital One: no minimum age
- Chase: no minimum age
- Citi: no minimum age
- Discover: 15 years old
How do I add an authorized user?
After you have assessed the benefits of adding authorized users and realized that your children (or spouse with limited/poor credit history) could benefit from being added, the next step is getting them added. Typically, the easiest way to add an authorized user is simply to log in to your online account and request the addition of an authorized user. You will need to have the individual's name, date of birth, and social security number. Additionally, a mailing address is required; this is where the new credit card will be sent. Alternatively, you can call the number on the back of your credit card and request to add an authorized user over the phone. You will need the same information as if you were requesting the addition via your online account.
How do I remove an authorized user?
At some point, you may choose to remove an authorized user. While most credit card providers will let you add authorized users through your online account, removing them online is not always an option. You will need to log in to your account to see if this is possible. If not, then you must call the number on the back of your card and request removal. Since you are the primary account holder, no approval or consent is required from the authorized user. However, keep in mind that just like the authorized user benefits from your credit history, removing them from the account may negatively impact their credit, so be sure the individual's other credit accounts are sufficient to sustain their credit score. Regardless, a drop in credit score can likely be expected. The significance of this drop will depend on the individual's other credit accounts.
Conclusion
Adding an authorized user can benefit or hurt the individual being added. It will only benefit the authorized user if the primary account holder has good credit and utilizes responsible debt management practices. The primary account holder retains all financial responsibility for any charges by the authorized user, but the authorized user will receive a separate credit card. Adding an authorized user is a great way to help your spouse, child, or other trusted individual build credit, especially if they have a limited (or non-existent) credit history. Unlike applying for an individual credit account, an authorized user does not have to be 18 years old. Therefore, you can help your children build their credit so they have a strong credit history upon reaching adulthood. Before adding an authorized user, ensure you can trust that person, as you are financially responsible for their decisions.
