Adding an Authorized User to Your Credit Card

Remember when you applied for your first credit card or loan? For someone who isn’t sure how to start building credit, this can seem like a huge task. By adding a family member like your spouse or teen as an authorized user to your credit card, you can easily help them build or improve their credit based on your credit history. But before you hand out that extra card, let’s see how adding an authorized user works and how it can benefit both of you—if you do it the right way.

What is an authorized user?

Adding an authorized user to your credit card means you are giving someone else permission to make purchases on your credit card account. They’ll receive their own card, but you will be responsible for paying off the balances. This can be a great way to help someone build or improve their own credit, it can also negatively impact your credit if not used responsibly. Think of an authorized user like you are letting someone borrow your credit card, but ultimately you are in control of the account.

Most credit card issuers will allow you to add an authorized user online, over the phone or through their app. With a FAIRWINDS credit card you can easily add an authorized user online or through our mobile app in Card Management.

Why would someone want to add an authorized user?

While adding someone as an authorized user can be a big responsibility, with a set plan in place, adding an authorized user can be a win-win for you both!

Help someone build their credit.

If your credit account is in good standing, adding an authorized user to your card can positively impact or help build the other person’s credit score. The credit history of your account is usually reported to the credit bureaus under both your name and the authorized user’s name.

Teach good spending habits.

Adding someone as an authorized user can be a great way to teach them how credit works if they are just starting out or building their credit. For example, you can set rules like only using the card for emergencies or keeping purchases within a set budget. That way they can learn your responsible spending habits and how to use a credit card the right way, rather than making impulse purchases and getting into debt.

Earn more rewards!

If you have a cash back or travel credit card, adding someone as an authorized user can help you earn rewards even faster. Every purchase made by the authorized user adds to your cash back or points balance, helping you get closer to that next reward. Just be sure to always pay off your card each month as to not put yourself in debt for earning rewards.

With every authorized user comes great responsibility.

If you do choose to add someone as an authorized user, here are a few things to keep in mind to ensure you both keep a good credit score.

Pay off the balance each month.

To stay out of debt, always try to pay off the credit card balance in full every month. That way, you avoid interest charges and will keep your credit in good shape.

Keep your overall balance low.

Make sure to discuss with the person you’re adding to your card what the credit limit is. If you carry a high balance on your card, this can negatively impact both of your credit scores.

Stick to a budget.

When you add someone as an authorized user, you are ultimately responsible for all charges on the card. Before you add someone, make sure you both understand how the card will be used. Create a budget and set spending rules to stay on track.

Choose your authorized user wisely.

Adding a spouse, child, or family member you trust could be a great way to help them build or improve their credit. However, be cautious of adding a friend or neighbor as you will be solely responsible for the balances on the card. If not used wisely, it could lead to financial stress, debt, or even damage to your credit.

Adding an authorized user to your credit card can be a smart move as long as there are rules for spending responsibly. Remember, communication and responsible use of the account are key to help you both build credit and maximize the benefits of an authorized user! For more tips on understanding credit or how to build your credit, visit our article A Beginner's Guide to Understanding Your Credit Score.