Adding an Authorized User on Your Credit Card

I recently added my one year old infant as an authorized user to some of my credit cards and I thought of writing this post to talk about the advantages and disadvantages that comes with it.

An additional user on a credit card refers to someone who is authorized to use the credit card account alongside the primary cardholder. The additional user, often called an authorized user (AU), is typically a family member or trusted individual designated by the primary cardholder. They receive their own card linked to the same credit card account of the primary cardholder.

Depending on the issuer company, an authorized user is sometimes issued the same card numbers as the primary cardholder. While authorized users can use the credit card for purchases, the primary cardholder is responsible for all charges and payments associated with the authorized user’s account.

In this post, we will explore the pros and cons of including your infant (or anyone else) as an authorized user on your credit cards to help you make an informed decision. 

Introduction:

Adding your infant as an additional user on your credit cards can be a decision with potential benefits and drawbacks. While it may offer opportunities for building credit history and financial education, it also comes with liability and security considerations.

Related: The 5/24 Rules of Credit Cards

Pros:

1. Early credit history: Adding your infant as an authorized user allows them to start building a credit history at a young age, potentially giving them a head start in establishing creditworthiness later in life. 
   
   
2. Potential credit score boost: If you have a good credit history and low credit utilization, adding your infant can positively impact their credit score by introducing a low utilization ratio and a longer credit history. Imagine your teenage child being in the 800-club of credit score with years of credit history.
   
   
3. Financial education: Involving your child in credit card usage from an early age provides an opportunity to teach them about responsible spending, budgeting, and the importance of timely payments.
   
   
4. Emergency funds: Adding your infant as an authorized user can serve as a backup for emergency situations, ensuring they have access to funds when needed.
   
   
5. Convenience: By having your child as an authorized user, you can simplify transactions and make purchases on their behalf, especially for expenses related to their care and well-being.
   
   
6. Potential rewards: If your credit card offers rewards or cashback benefits, you can earn additional rewards when your authorized user makes eligible purchases.
   
   
7. Controlled spending: Adding your child as an authorized user allows you to monitor their spending habits and guide them towards responsible financial behavior. As the primary cardholder, you also have an opportunity to control and set a specific amount as the limit the authorized user can spend on the card.
   
   

Cons:

1. Liability for debt: As the primary account holder, you are responsible for any charges made by your authorized user, which includes the potential risk of accumulating debt if they misuse the card. 
   
   
2. Credit risks: If your authorized user’s credit behavior negatively affects your credit history, it can potentially lower your credit score and impact your ability to secure credit in the future.
   
   
3. Security risks: Sharing credit card information increases the risk of unauthorized use or identity theft, especially if the card is lost or stolen.
   
   
4. Potential overspending: Adding a minor as an authorized user may increase the temptation to overspend, especially if the card is not used with proper limitations and monitoring.
   
   
5. Limited financial responsibility: By relying on a credit card, your child may not fully grasp the concept of responsible money management and may not learn to prioritize saving and budgeting.
   
   
6. Fees and charges: Some credit card issuers may charge additional fees for adding authorized users, which can increase your overall expenses.
   
   
7. Complex financial dynamics: Introducing credit cards to children at an early age can create complex financial dynamics within the family, potentially impacting relationships and creating confusion about financial responsibilities.
   
   

In Conclusion:

Adding your child (or anyone) as an authorized user on your credit cards can have several advantages, such as building their credit history, potentially boosting their credit score, and providing an opportunity for financial education. Additionally, it can offer convenience, emergency funds, and potential rewards. However, it’s important to consider the potential liabilities, credit risks, security concerns, and the possibility of overspending or creating complex financial dynamics within the family.

Before making a decision, take the time to thoroughly evaluate your financial situation, goals, and priorities. If need be, consult with a financial advisor who can provide personalized guidance based on your specific circumstances. Keep in mind that responsible credit card usage and open communication about financial matters are crucial when involving your child in credit card usage.

Ultimately, the decision to add your child (or anyone) as an authorized user should align with your long-term financial objectives and prioritize the security and well-being of your family. By weighing the pros and cons, you can make an informed choice that sets a solid foundation for your child’s financial future.

Lastly, having traveled to 5 US states, 5 countries, and flown 50,000 miles as a 1 year old, there was no point waiting till she gets any older than this before the decision is made. We believe the earlier we start teaching our infant about all these tips and tricks, the better.

What are your thoughts on adding an authorized user to your credit card accounts? Have you been added as an AU before? We’d like to hear your experience.