For anyone with a credit card, you may have seen an option to add an authorised user to your account. But is this a sneaky way of enabling the additional cardholder to boost their own credit score? Here’s what you need to know…
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Do authorised credit card users build credit?
An authorised credit card user, also known as an additional or supplementary cardholder, is where a main cardholder voluntarily adds another individual to his or her credit card account.
Payments made by the authorised user are connected to the primary account and thus responsibility for making repayments lies with the main cardholder.
Yet adding an additional cardholder to your account isn’t a shortcut to help them build credit. Below I explain why, but first, here are some reasons why you may wish to add an additional cardholder…
What are the benefits of authorising another credit card user?
Having a trusted cardholder (such as your partner) being able to spend on your account can allow you both to keep track of your spending.
Plus, if you’re an avid user of reward credit cards – where you effectively get paid to spend – having your partner as an additional cardholder may help you hit any defined spending triggers to unlock rewards.
Adding an additional cardholder is also a straightforward process. As long as your credit card account is in good standing and you both live at the same address (though this isn’t always a requirement), adding an additional cardholder is usually achieved in a matter of clicks via your online credit card account. There’s no credit check involved, either.
Also, some providers, such as American Express, will even pay you a small bonus for adding a supplementary account holder.
Note: An authorised credit card user is different from having a joint bank account where responsibilities are shared. See Joint vs Separate Bank accounts.
Could you be rewarded for your everyday spending?
Rewards credit cards include schemes that reward you simply for using your credit card. When you spend money on a rewards card you could earn loyalty points, in-store vouchers airmiles, and more. MyWalletHero makes it easy for you to find a card that matches your spending habits so you can get the most value from your rewards.
Will being an authorised credit card user build credit?
The short answer is no. Authorised credit card users will not build up their credit by using a supplementary card. This is because the main cardholder is responsible for making repayments.
So if the additional account holder is looking to build credit, it’s best that they open a credit card account in their own name. If they can’t get a popular reward credit card or 0% spending card, due to a poor credit score, then it’s worth exploring specialist credit cards for bad credit.
Remember, your credit score can influence how easily you can access the best mortgage, credit card or loan deals, so it’s worth paying attention to.
Adding an authorised user to my account: What should I look out for?
It almost goes without saying but if you’re planning to add a supplementary cardholder to your account, remember that you will take on full responsibility for all payments. With this in mind, only ever add an additional cardholder to your account who you absolutely trust 100%. It’s why married partners are typically good candidates.
It’s also worth knowing that adding an additional cardholder also carries the risk of losing valuable Section 75 protection. Under normal circumstances, Section 75 protects you for purchases between £100-£30,000 made with a credit card by making the card provider equally liable if anything goes wrong with your purchase.
Yet the basis of this protection becomes somewhat blurred when a payment is made on a credit card by an additional cardholder.
While Section 75 protection is likely to apply if a purchased item provides some benefit to the main cardholder – or the main cardholder has specifically authorised the purchase – if an item was purchased for the additional cardholder’s benefit, then the protection is unlikely to apply.
To avoid this potential headache, it’s best to get the main cardholder to make any big purchases.
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