Credit card Q&A: “Should I add an authorized user to my credit card account?”
These days, credit card companies are constantly urging us to add an authorized user. In fact, they’re even incentivizing us to do, offering 5,000 bonus points in many cases.
For example, Chase Sapphire Preferred card holders can get an additional 5,000 Ultimate Rewards points if/when they add an authorized user and that individual makes a purchase within the first three months of account opening.
And there is no annual fee for the authorized user, only the primary cardmember.
Seems pretty easy, doesn’t it? That’s a minimum of $50 in value for simply adding a boyfriend, girlfriend, husband, or wife to your account. Why not, right?
Authorized Users Aren’t Responsible for Repayment
Well, here’s the first problem with adding an authorized user to your credit card. They aren’t responsible for the repayment of charges they make.
However, they have the same exact charging privileges as the primary cardmember. Kind of scary, no? In short, it means they can go on a spending spree on your dime.
Of course, you have the power to cut them off at any time, but that doesn’t mean they can’t do some serious damage in a matter of a few hours.
They can effectively ruin your credit (and only your credit) if you’re unable to pay back the charges they make in a timely fashion. It can affect them too, but they might be able to remove the delinquent account from their credit report if they claim they’re simply an authorized user.
For the record, American Express is the only credit card issuer that actually lets you set fixed credit limits for your authorized users. Other card issuers just let them charge up to whatever your credit limit is.
Do You Want 5,000 Points or 100,000?
Another downside to adding an authorized user is the fact that the card will likely wind up on their credit report, which can limit their ability to get approved for credit cards in the future.
For example, the Chase 5/24 rule, which bars you from getting approved for UR-earning credit cards if you’ve opened five credit cards in the past two years, includes authorized user accounts.
So say you add your wife as an authorized user and she had opened four credit cards in the past two years. The authorized user card would push her total to five, and that could lead to a denial under the 5/24 rule.
You’d maybe get those 5,000 bonus points, but lose out on her being able to apply for a new Chase card with a massive bonus.
In short, would you rather get 100,000 extra points for your household or 5,000? I think we all know the answer to that question.
Authorized User Fees by Credit Card
Additionally, many credit card issuers charge you a fee to add an authorized user on a premium credit card.
Here are the authorized user fees charged annually for a select group of popular credit cards:
Amex Centurion: $2,500 for each authorized user
Amex Gold: $45 for up to 5 additional cards, $45 for each additional card thereafter
Amex Platinum: $175 total for up to 3 authorized users, $175 per additional authorized user
Barclaycard Arrival Plus: $0 for authorized users
Chase Freedom: $0 for authorized users
Chase Ritz-Carlton Rewards: $0 for authorized users
Chase Sapphire Preferred: $0 for authorized users
Chase Sapphire Reserve: $75
Citi Prestige: $50 for authorized users
Note that some of these cards have annual benefits like travel credits, which are calculated on an aggregate basis. That means the $300 travel credit for Chase Sapphire Reserve is allocated across the entire account, not per user. You only get $300 total amongst all users combined.
However, things like lounge access apply to each authorized user, which can be a plus. And reimbursements for things like Global Entry can apply to any of the authorized users.
Just be sure to carefully review the benefits for authorized users to ensure you aren’t misinterpreting the rules and spending money unnecessarily.
Authorized Users Can Help with Spending
At the same time, an authorized user can help you meet minimum spend to earn a mega credit card bonus. The Chase Sapphire Reserve requires $4,000 in spending, a tough feat for many people to be sure.
But if you add a responsible family member or boyfriend/girlfriend, that goal is more or less split in two. Can two people each spend $2,000 a lot faster and ensure the necessary spend is met to earn the bonus?
This is one of the main advantages of adding an authorized user when a big bonus is involved.
In the process, you can also give the authorized user some other perks, such as airport lounge access if the card offers that.
I know a guy who made his long-distance girlfriend an authorized user so she could use the lounges when she comes to visit.
That’s a nice gesture, but perhaps she should have applied for the card herself and earned the massive bonus and avoided the $75 fee (and gained access to the lounges!).
You Can Boost Authorized User’s Credit Scores
One final benefit to adding an authorized user is the ability to boost their credit scores. If someone lacks sufficient credit history to generate a solid credit score, you can add them as an authorized user and start generating positive account activity.
Once they’ve been an authorized user for a few months, any good payment history should reflect in their scores and boost them accordingly.
This is a good way to help someone either establish their credit initially or simply improve upon existing scores that need a little shot in the arm.
Of course, if this is your intention it might be wise to add them onto a card that doesn’t charge a fee to include an authorized user.
In summary, be sure to only add authorized users you know and trust. As noted, you’re giving them a lot of responsibility and it is you and you only that is on the hook for their actions.
Also, be sure to weigh the pros and cons of adding an authorized user versus just having them apply for their own credit cards. You might find that it’s a lot more beneficial to have them open their own card to collect more points and card benefits.