What Is an Authorized Credit User?

Amanda Claypool

Writer

One of the easiest ways to build credit history is by using a credit card. If you’re too young or are trying to repair your credit, getting a credit card might not be an option. That’s where becoming an authorized credit user could help.

Someone added to another person's credit card account, they can make purchases using their card. They don’t have to worry about making payments, as the primary cardholder is responsible for the balance on the card. Which can be helpful for someone who is learning how to manage credit for the first time.

You might be wondering if you should add an authorized user to your credit card account or if you should become one yourself. Before you do, here are some important things you need to know.

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  • An authorized user is someone who is added to a credit card account.
  • They'll receive their own authorized user credit card, with a unique card number, but they don't have to use the card to benefit from it.
  • Authorized users aren’t joint account holders, which means they aren’t liable for payments or fees.
  • Becoming an authorized user can be a way to build credit for the first time while also learning how to safely use a credit card.

What is an authorized user? 

An authorized user is someone who’s been added to a credit card account but isn’t the primary account holder. This could involve a child added to a parent's account, a spouse added to their partner's account, or even a close friend added to another friend's account. They aren’t the primary cardholders, but they enjoy some of the same benefits of having a credit card as if they were one.

A benefit of adding someone as an authorized user to a credit card is that they aren’t responsible for the account. They are issued a credit card of their own and can make purchases with that credit card. However, they aren’t responsible for making payments. That responsibility falls to the primary cardholder.

Because they aren’t liable for making payments on the account, becoming an authorized user can be a great way to help individuals establish credit, especially young adults. While not every credit card issuer will allow account holders to set up spending limits, some do. Adding an authorized user can be part of a bigger process to teach someone else how to manage money and establish good spending habits.

Authorized users vs. joint account holders

Authorized users are different from joint account holders. Each has different responsibilities that can affect how their credit is built.

The biggest difference is that joint account holders are responsible for payments and fees associated with the credit card alongside the primary cardholder. Married couples might prefer this when it comes to managing finances but it can also complicate things. If a payment is missed and it’s reported to the credit bureaus, both account holders are individually affected, regardless of who made purchases on the card.

Joint account holders also have more control over the account than authorized users. A joint account holder can dispute charges or request a spending limit increase, while an authorized user typically can’t.

The process for adding or removing an authorized user is fairly straightforward and can happen anytime when the account is active. If a credit card permits adding a joint owner, typically, one must complete this during the account opening process. Depending on the terms of the account, the joint account holder might need to remove themselves from the account if they so choose.

How does being an authorized user affect your credit? 

Being an authorized credit user can help you establish a credit history for the first time. Or rebuild credit if you’re digging yourself out of debt. Their status can help young adults who are just starting or anyone who wants to start with a clean financial slate.

Credit card issuers report account activity to the major credit bureaus, even if you’re just an authorized user on a card. If someone is added as an authorized user on a credit account where payments are made on time and the balance is paid in full each month. It could help them boost their own credit score as those positive behaviors will show up on the authorized user's credit report. This can happen without the authorized user even having their own physical card. They can simply benefit from the positive credit history and responsible credit habits of the primary cardholder.

Being an authorized user can have a negative impact. While not required to make payments, they still face consequences if payments are not made. Failure by the primary cardholder to make a payment could negatively impact the credit of the authorized user. This could wind up damaging your credit, making it difficult for an authorized user to open their account later on.

Credit utilization is another big factor to consider. If they go on a spending spree, they could use up too much available credit. Credit utilization accounts for about 30% of credit scores. Using too much credit can affect the credit scores of both the primary cardholder and the authorized user. Discussing expectations and setting limits upfront on how to use a credit card with an authorized user is essential. This can avoid credit card misuse while fostering good credit habits.

What responsibilities does an authorized user have?

Authorized users don’t have very many formal responsibilities. Unless a credit card issuer allows the primary account holder to set up a spending limit, they can spend as much as the credit limit on the account. They have no obligation to make payments and do not bear liability for fees.

While they don’t have responsibilities to the credit card issuer, they may have responsibilities to the primary cardholder. If a parent adds a child to their account, they may establish expectations regarding allowable charges and whether the child should contribute to monthly payments. The account holder and authorized user would individually maintain these responsibilities established outside the formal credit card agreement.

Happy father and son sitting on a couch: Guide on what is an authorized credit user

How to add an authorized user to your credit card

To add an authorized user, call your credit card company or log into your account. Upon completing the prompts to add to the account, the system will issue a credit card in their own name.

Before formally adding them, make sure you’ve established expectations around how they will participate in the account. Determine what portion of the balance they will pay each month and how they will pay it. Create an exit plan right from the start to eventually transition them to an account of their own. Allows them to practice using a credit card, knowing they will be accountable for their spending habits in the future.

FAQs

How do you remove an authorized user from a credit card? 

There are several legitimate reasons to remove an authorized user from a credit card, including removing the privilege from an adult child or revoking access after a breakup. Depending on the issuer, you can remove them from your credit card either online or by contacting customer service.

Calling your credit card company directly is the best way; it allows you to verify the removal from your account.

Do authorized users have spending limits?

Credit cards don’t always allow you to set up specific spending limits for authorized users. Typically, they have to adhere to whatever the credit limit is on the card, just like the primary cardholder.

Nevertheless, there are methods to oversee their spending. Set up a spending limit offline and create a process to regularly check in and monitor the account’s activities. Some credit cards allow you to set spending alerts for specific dollar amounts or at certain vendors. Although it won't stop purchases, it can signal potential overspending, helping you monitor adherence to the agreed spending limit.

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Author picture

I'm an award-winning lawyer and personal finance expert featured in Inc. Magazine, CNBC, the Today Show, Business Insider and more. My mission is to make personal finance accessible for everyone. As the largest financial influencer in the world, I'm connected to a community of over 20 million followers across TikTok, Instagram, YouTube, Facebook and Twitter. I'm also the host of the podcast Erika Taught Me. You might recognize me from my viral tagline, "I read the fine print so you don't have to!"

I'm a graduate of Georgetown Law, where I founded the Georgetown Law Entrepreneurship Club, and the University of Notre Dame. I discovered my passion for personal finance after realizing I was drowning in over $200,000 of student debt and needed to take action-ultimately paying off my student loans in under 2 years. I then spent years as a corporate lawyer representing Fortune 500 companies, but I quit because I realized I wanted to have an impact; I wanted to help real people and teach them that you can create a financial future for yourself.

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Our aim is to help you make financial decisions with confidence through our objective article content and reviews. Erika.com is part of an affiliate sales network and receives compensation for sending traffic to partner sites, such as MileValue.com. This compensation may impact how and where links appear on this site. This site does not include all financial companies or all available financial offers. This in no way affects our recommendations or article content.

Advertiser Disclosure

Our aim is to help you make financial decisions with confidence through our objective article content and reviews. Erika.com is part of an affiliate sales network and receives compensation for sending traffic to partner sites, such as MileValue.com. This compensation may impact how and where links appear on this site. This site does not include all financial companies or all available financial offers. This in no way affects our recommendations or article content.

Advertiser Disclosure

Our aim is to help you make financial decisions with confidence through our objective article content and reviews. Erika.com is part of an affiliate sales network and receives compensation for sending traffic to partner sites, such as MileValue.com. This compensation may impact how and where links appear on this site. This site does not include all financial companies or all available financial offers. This in no way affects our recommendations or article content.