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Authorized User vs Joint Account – How to Add a Cardholder

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When adding somebody to an account, a common question is whether to add them as an authorized user or joint account holder. Here’s the difference.

authorized user or joint account holder

Are you looking into the options for sharing a credit card with another person? There are actually two main options to consider when making the decision to share a credit card. You can either choose to make one person an authorized user or open a joint account. Take a look at the benefits and risks of both options before you decide what your next move should be.

Authorized User

An authorized user is someone who piggybacks on an existing credit card. They can’t control the card and are not financially accountable for paying off the card. They can’t seek a credit limit increase or close the account. However, they can use the card.

This option is often used when a person is trying to improve their credit score. The credit card company issues a card to the authorized user. The new user is able to make purchases with the card as if it belongs to them.

The authorized user, however, won’t be financially responsible for paying the credit card bill or any fees associated with the account. Here are some situations where adding an authorized user to an account might be a good choice:

  • A person needs to establish or rebuild credit
  • A family member only needs to carry a credit card for potential emergency situations
  • A family member needs some accountability regarding spending habits and bill-paying habits

You can add a person to your card regardless of their credit score or credit history. Adding an authorized user to an account can put the cardholder at risk because the full responsibility for paying the bill falls on the shoulders of the cardholder. This is one of the reasons why this type of arrangement should really only be done among parents, spouses and other close family members.

Of course, it’s always wise to set up card alerts for purchases if you’re allowing another person to have access to your account. The cardholder is permitted to remove an authorized user from an account instantly for any reason.

Joint Account

Opening a joint account is different from adding an authorized user. With a joint account, both people will have equal ownership of the card and equal responsibility regarding payments. Here are some situations where opening a joint account might be a good idea:

  • A couple wants to build credit together and make it easier to pay bills
  • A parent wants to help a teen or young adult open a first credit card
  • Business partners want a shared way to charge and pay off business expenses

While adding an authorized user to your account can be done at any time, joint accounts must be opened by both account holders from the start. Both account holders must meet an institution’s requirements for credit and income before a card is issued.

The application for a card can be denied if one of the applicants doesn’t meet those requirements. While an authorized user can be removed from a credit card at any moment, removing a joint user from an account isn’t so simple. The only way to dissolve this type of financial partnership is to transfer or pay off the balance before closing the account for good.

What Is the Better Choice?

Is it better to add an authorized user to an account or opening a joint account? Both options offer specific pros and cons. Becoming an authorized user on a credit card is one of the most popular methods for building credit.

This option, however,  probably isn’t necessary or beneficial if two people with good credit would like to share a credit card. Opening a joint account with a partner or family member is a better way to spread accountability across both cardholders than simply making one person an authorized user.

Authorized User Pros and Cons

  • You can add a child or family member regardless of their credit history
  • An authorized user can improve their credit score
  • It’s a simple and quick process
  • The cardholder can remove the authorized user at any time
  • The cardholder is responsible for all charges made by the authorized user

Joint Account Pros and Cons

  • Both account holders are responsible for paying the bill
  • Both account holders and improve (or hurt) their credit score
  • Account holders must each meet the credit card issuer’s underwriting standards

Published or updated September 4, 2017.

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