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In the world of credit cards, here’s a fairy tale: Financially savvy person meets the perfect Player 2, adds them as an authorized user, and they live happily ever after on points and miles.
Unfortunately, love doesn’t always work that way. Relationships don’t always pass the test of time, whether it’s with a significant other, family member, friend or business partner. And when things go sour, financial entanglements like shared credit cards can be particularly difficult to separate.
Here’s why many people opt to add authorized users anyway — and why others have regretted the decision.
Why might you want to have — or be — an authorized user?
If the article headline made you bust out some popcorn for the drama, relax: Adding someone to your credit card account isn’t totally crazy. In fact, many pros in the game utilize authorized user accounts for many different, kosher reasons.
It might also surprise you to know that you aren’t limited to sharing your account with family members only. Significant others, extended family and even friends or acquaintances are all allowed by credit card issuers, as long as you’re comfortable assuming the risk of bringing in a new person to share your financial history.
Related: Common credit card mistakes — and how to avoid them
Building an excellent credit history and credit score
Building good credit from scratch takes a lot of diligent, careful effort. Credit history isn’t a course you can take in most schools, and far too many people have to learn the ropes the hard way. However, some people have the good fortune of getting a jump start on great credit, thanks to family members and good friends who add them on to their credit card accounts as authorized users.
Establishing credit through an existing cardholder is the persona finance equivalent of holding expedited security membership, allowing you to “skip the line” and go straight to the top when it comes to building your credit history and score — as long as you pick the right person to partner up with, of course. But more on that later.
Share credit card perks and benefits, including lounge access
This is another major reason why people opt for authorized user cards. Several premium credit cards extend certain benefits to authorized users, often for a far lower annual fee than the one charged for the main credit card. For example, the Citi® / AAdvantage® Executive World Elite™ Mastercard® extends Admirals Club lounge access to authorized users (not including partner lounges), while The Platinum Card® from American Express offers individual Global Entry fee credits (up to $100).
I personally have most of my siblings and both parents as authorized users on my Chase Sapphire Reserve account, specifically for the Priority Pass lounge memberships. But Priority Pass membership costs several hundred dollars each year, as does my credit card annual fee. Since everyone else already holds the daily spending credit cards of their choice, my annual investment of $75 per authorized user allows me to give everyone an easy, practical holiday gift that earns me a sweet thank-you text every time someone in the family passes through an airport lounge. (Granted, this perk was far more useful before 2020 happened and COVID froze most travel, but I have faith that the travel industry will rebound.)
Trip protection is another fantastic credit card perk that authorized users may be able to enjoy, at least on some cards. While trip protection will never trump a dedicated travel insurance plan, these emergency travel benefits are free benefits that come with your card — and authorized users can take advantage at a fraction of the regular credit card cost.
As always, double-check to see what benefits your particular card offers, and familiarize yourself with your authorized user’s perks as well to make sure they will actually get the benefits they need.
Easily share points and miles across family accounts
Many times, spouses or significant others add each other to credit card accounts to centralize spending and earn points toward a common goal. This strategy is particularly effective if one person is an avid points and miles aficionado, but the other partner just wants to be told what to use and when. Credit card companies often encourage bonus users — and thus, more spending — by offering additional points incentives for adding authorized users or touting the convenience of sharing an account with a household member.
For instance, having an authorized user on an Ultimate Rewards credit card allows you to transfer rewards between family members. Let’s say you’re sitting on a pile of Ultimate Rewards points that you want to transfer to a family member’s United MileagePlus account. If you process the transaction through United, sharing United miles carries a fee of $7.50 per 500 miles, plus a $30 processing fee. But if you go through the Chase portal, you can transfer Ultimate Rewards points directly into the United MileagePlus account of an authorized user without violating any rules or incurring hefty fees.
It’s important to note that Chase allows household members to transfer Ultimate Rewards points to one another. But if you want to transfer Ultimate Rewards directly to a hotel or airline partner account, you can only do so into a loyalty account held by an authorized user on your Chase credit card. So while it might not make financial sense to sign up for an authorized user card for your 10-year-old, it does make a lot of sense to do so if you plan to put miles or points into her airline loyalty program for that next big family vacation.
Related: Why I’m still keeping my Chase Sapphire Reserve
Moving on to the downsides of adding an authorized user, here are some concerns to keep in mind.
Stating the obvious: They spend, you pay
Not to ignore the elephant in the room: Yes, if you share your credit card with someone else, they charge purchases to it. Some cards allow you to set a spending limit on an authorized user’s card, and you should make liberal use of this feature if it makes sense for your scenario. But the bottom line is this: If anyone spends on that card outside of a genuine fraud scenario, you are responsible for paying off the charges. Period. You can always work out some kind of repayment system between yourselves. But in the eyes of the issuer and the law, the primary account holder holds sole responsibility for paying off the balance.
To that end, two TPG readers shared their workarounds to avoid financial liability. “I took my sister off my card after some bad financial decisions,” Holly Oberle told TPG.
Meanwhile, Becky Blaine came up with a creative compromise: “My only authorized user is my daughter, and I don’t give her the actual cards,” Blaine said via Facebook. Her tactic is a particularly smart way to limit financial risk while building credit history and transferrable points options for her daughter: If you want to share card perks but not spending access with someone, designate them as an authorized user — but then keep the physical card in your own possession. This works because authorized users are supposed to share your household, meaning all cards will be mailed to your home address.
Related: How credit scores work
The authorized user’s credit history may take a hit if you remove them from your account
If the authorized user card is your first or only credit card, you stand the most to lose in this situation. Not only do you not earn points and miles or similar rewards for yourself and your own account, but you also lose all of the credit history associated with the card.
Just how much are you at the mercy of your primary cardholder? The correct answer is “entirely so.”
“My aunt was an authorized user,” TPG reader Lauren Harrison said on Facebook, “and after her divorce, she had zero credit. [She] had to start from scratch and build it up.”
Joy Joie had a similar woeful tale to share. “I was [an] authorized user on my aunt’s Amex Platinum for seven-ish years before her new, controlling husband cut her off from us. I [had] never abused it, and always paid off what I put on it — [but] I found my card canceled one day. [So] I just opened my own, adding my hubby, mom and mother-in-law as authorized users on [my account.”
I relate to this concern and am very fortunate to have a good outcome to share. My first credit card was an American Express Blue Cash Everyday back in 2010… and it’s an authorized user card on someone else’s account. None of my other current accounts are nearly as old as this one since I naively closed some of my earliest cards years ago without understanding the full ramifications (I thought I was being responsible for consolidating accounts!).
Fortunately, my former partner is a very kind person who kept my account open even after we parted ways. I also do my best to repay the trust by repaying him immediately on the rare occasions I use the card once or twice a year. But if I had known in 2010 what I know now, I would have applied for a different credit card in my own name around that time — or else I would’ve just kept that 2006 Bank of America credit card from college. Darn!
Related: When to avoid being an authorized user
If you are the authorized user, you will be impacted by the primary account holder’s credit history
This point cannot be understated enough: The same “skip the line” benefit of sharing someone’s credit history works in reverse as well. If you get added onto someone’s credit card account, and they stop making payments, your credit score and record will take a hit as well.
The good news? Removing an authorized user is a straightforward process for either party: One call to your issuer should do the job.
Related: Do coronavirus credit card perks apply to authorized users?
Grab the popcorn: TPG readers tell us about their experiences
In the incomparable words of TPG superfan Maria Mozzicato: “I’m in the mortgage business. How much time do you have for stories of what authorized users have done to people, and how they reacted when they found out?”
Brent Klovstad’s experience with a past partner is #goals for a breakup. “I’d never put someone I didn’t trust with my life on a [credit] card [account],” Klovstad told the TPG Lounge, “so it was pretty easy when we broke up. I told her she could stay on the cards [for] club access, but asked her not to charge anything, and she decided to cancel them. She did have an accidental charge come through one of my other cards (saved to our shopping profile that she was auto-logged into in an app) and she immediately sent me a Venmo. Pretty easy all around, but that’s because she’s also a good person, even if things didn’t work out for us.”
Jennifer Egan Siler had a similar, relatively clean split with a partner after their divorce. The two had shared her American Express Platinum rewards credit card during their time together. “But it was my original account from 30 years ago, upgraded over the years, so I kept the account and points,” Siler told TPG via Facebook. “It was not really negotiable, in my opinion!”
Unfortunately, firsthand anecdotes can be a bit like review websites: Some people share glowing stories of an experience gone well. But for the most part, people are there to share the bad. And wowza, did TPG readers have some stories to tell.
Luis Trujillo told the TPG Lounge that he kept his ex, who shares custody of their teenage daughter, as an authorized user on his American Express card for many years for the sake of covering her essentials and emergencies. But in recent months, things changed. “Though our relationship was civil the last few years, I noticed that there would be more suspicious charges, and the average use increased each month. Though she was using it only at supermarkets, she rarely, if ever, cooked anything, and my daughter would frequently complain of expired food in the fridge.
There were also frequent trips to gas stations with $10 [charges] like every other day. When I asked about the charges, she couldn’t explain them. When I asked if the card had been stolen, or if there was a possibility that someone else could be using it, she didn’t give me a straight answer. I canceled it. Thankfully now my daughter is old enough to use her own card.”
Retail workers had many a story to share from the customer perspective.
Maria Mozzicato shared one of her mortgage industry career stories, saying, “My favorite one is when the jilted spouse reported her husband as dead to American Express, which flagged his credit report as being deceased. When he wanted to apply for a mortgage, we had to ‘bring him back from the dead.’ It sounds easy, but it isn’t! It took months, and he and his girlfriend lost out on their dream home!”
Meanwhile, Troy Heagy told TPG via Facebook, “At JCPenney, we often had wives try to use husbands’ cards. They got so angry because I rejected them [according to] store policy. Just because a woman named Jane Smith claims she is authorized to use John Smith’s card does not make it true. That’s how theft occurs.” Ingrid Rey added, “I have worked retail — including [at] JCPenney, actually — and good Lord, if this isn’t the truest of statements.”
Another TPG superfan, Shana Gainey, shared how her then-husband had been an authorized user on her card for the sake of purchasing household items and groceries — less than $500 each month — and was supposed to pay it off in full each month, per their agreement.
“But one month, he charged about $3,000 to it for his hobbies after up and quitting his job — against my advice — despite having no savings to pay the bill. I removed him from the card, transferred the balance to a card with 0% APR for 18 months, and he started making $100/month payments but soon reduced his payments to the minimum required. Later on, due to unrelated circumstances (cough, cough, his wandering eye), we ended up getting a divorce, and according to the [divorce decree], he’s responsible for paying off that debt. He electronically sends the payments to me at the end of the day on the due date after I consistently remind him each month, and he reduces his payment each time the minimum required payment drops. Therefore, it’ll take him many years and tons of interest to pay off this debt. I’ll be so glad when that happens!”
Mary Gasaway had a similar sad story to share regarding an ex whose poor financial decisions lingered far after the relationship ended. “My ex-husband was an authorized user on my credit card. He ran the card up [making charges at] hotels and restaurants with women who were not me. We divorced, [and] I ended up having to pay for all of it.”
Ending entanglements: personal finance edition
TPG account holders confirmed that the quickest, cleanest way to cut ties is by calling your credit card issuer immediately.
“The easiest solution is to immediately cancel that authorized user,” John Meggitt told TPG via Facebook. One major caveat from Meggitt? “Obviously, [taking action] requires you being aware that things went sour.”
Anastasia Utke and Nick Calacat had similar stories to share regarding friends who turned out to be financial liabilities. “I had a former friend who had an authorized card on my account,” Utke said. “We got in a fight and stopped talking, so I called Chase and canceled her card. Easy peasy.”
Similarly, Calacat’s friend paid $175 each year to cover the fees on his authorized user American Express Platinum. But when the friends stopped talking as much, Calacat texted to ask, “Hey, wanna pay $175 again or want me to cancel [the card]?” “He didn’t get back to me in over a week, so I just canceled it,” Calacat said.
If you’re the authorized user but you’re finding yourself negatively impacted by your primary cardholder, try to dispute/distance yourself as quickly as possible.
“My parents put me down as an authorized user for a card when I was a minor to have for emergencies, especially back when cellphones were not so popular,” Ingrid Rey told TPG on Facebook. “I never even used it. Literally like two decades later, my parents fell on hard times and decided to apply for bankruptcy.”
Rey said that the lawyer her parents hired gave them bad advice, urging them to stop making payments on their credit cards in preparation for the filing; before that Rey’s parents paid the minimum required on their balances.
Around the same time, Rey’s parents were going through bankruptcy, she and her husband were looking into buying their first home. “[My] husband got a call [saying], “Uh, your wife has terrible credit”: A low credit score, and bad marks on a Bank of America as well as a Chase card. “I checked my report, and sure enough, they were there. At that point, I didn’t even remember my parents’ cards, but after some digging, I noticed that [the accounts] said “authorized user” and put two and two together.” The credit reporting site Rey used had a section to dispute the different credit reports, so Rey did so. Both accounts were soon removed, and her credit score quickly shot up a couple hundred points, she said, and “we … were able to buy a home just fine.
At the end of the day, I still highly recommend leveraging authorized user credit cards to up your points and miles game and for sharing all of the great card benefits and earning potential. I have more than half a dozen authorized users across all of my personal accounts, from immediate and extended family to friends and business partners, and I trust each of those people with my life.
However, clearly setting the following guidelines at the start of our credit card relationship has really helped us keep our social relationship intact. I also highly suggest putting everything in writing, just because.
- Be clear about boundaries: If you are a primary cardholder and don’t want your authorized user spending on the card, don’t give them the physical card. If you’re OK with them spending up to a certain limit, set the limit within your system and specify how you want to be repaid, if you do. And if you want to place restrictions on the types of purchases your authorized user makes, make sure you state them clearly — and make sure they know that you can see full records of every charge they make. TPG senior cruise reporter Gene Sloan jokingly threatened, “If my daughter keeps putting the cat food for her cat Benny on the authorized user card I gave her that’s tied to my Amex, our relationship definitely will go sour!” We can only assume Benny is eating very well indeed, that lucky cat.
- Define the relationship: If you decide to part ways, what happens? Specify where and when the finished credit card will be handed over, as well as how benefits or outstanding charges should be resolved.
At the end of the day, you’re responsible for deciding if the authorized user game is right for you and your card partner — and when it’s time to break up. As with all relationships, personal finance decisions go a lot more smoothly when everyone is calm, kind and respectful.
Featured photo by Victoria 1 / Shutterstock.
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And when you do spend on dining, you should use a credit card that will maximize your rewards and potentially even score special discounts. Thanks to temporary card bonuses and changes due to coronavirus, you may even be able to score a meal at your favorite restaurant for free.
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