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Letting someone be an authorized user can help them build their credit, but you could be responsible for any charges they incur. Find out more.
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If you have a credit card, you likely have the ability to make someone an authorized user on the account. This means you give someone the official authority to have a card in their name linked to your account, which they can use to make purchases.
There are some good reasons why you may want to make someone an authorized user, but there are downsides as well. Here’s what to consider when deciding if you should allow someone to have this status on one of your credit accounts.
Here’s why you may want to make someone an authorized user
One of the best reasons to make someone an authorized user is to help them build credit. If you have a credit account in good standing with a positive payment, lots of available credit, and a low balance relative to credit available, that card’s history can help someone earn a positive credit score.
See, when you make someone an authorized user, the account shows up on their credit record. They get the benefit of your responsible borrowing behavior. This can be a big boon to your children or other family members who are building credit for the first time or who may have run into some past financial trouble and have bad credit. You don’t even have to actually give them the card for them to get the credit-building benefits as long as you add them as an authorized user and the account shows up on their credit record.
Adding someone as an authorized user could also entitle them to cardholder benefits, such as airline lounge access, although card policies vary as to how many authorized users you can add and whether they gain access to all of the generous perks provided by many rewards cards. You may want to check with your card issuer if this is your goal.
Finally, adding an authorized user authorizes that person to use your account. And there may be times when you want someone else using your account. For example, you and your spouse may want to use the same credit account, or you and your children might. Or perhaps you want an employee to be able to use the business card account to charge things.
When you give someone else the chance to use your card and they use it, that isn’t just convenient for them; it also helps you earn rewards for their spending as well.
Here are the big downsides of giving someone authorized user status
Unfortunately, there are some major downsides to giving someone else authorized user status. And the biggest is that you’re going to be responsible for any charges they make. They will have the authority to use your card but no legal responsibility to repay it. So if someone ends up spending more than you expect, you’re on the hook.
You may also be limited in how many people you’re allowed to add as an authorized user or, in some cases, may have to pay a fee to add extra authorized users. If that’s the case, you’d need to think carefully about who — if anyone — to give this privilege to.
By considering these advantages and disadvantages, you can make the best choice about when to add someone as an authorized user on your account.
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