The world of credit cards and credit scores can be overwhelming if you’ve never had one before.
If you’re considering becoming an authorized user, you might be wondering: Is an authorized user responsible for credit card debt?
In this article, I will cover some key information about credit card debt, including what it means to be an authorized user and whether an authorized user is responsible for credit card debt.
So, let’s take a look.
Before I get into this article, it’s important to establish what an authorized user is, so you can gain a better understanding of what it means to be one.
To put it simply, an authorized user is an additional cardholder on someone’s credit card account. A credit card is in your name and is linked to the primary cardholder’s account.
These additional cardholders can legally make transactions but can’t be held liable for the payments or any delinquent debt that might occur.
In order to become an authorized user, the primary account holder needs to contact the credit card issuer and request that you be added to the account.
Following this, you will receive a copy of the credit card imprinted with your name and you will be able to start spending with it.
As an authorized user, you are considered a secondary account holder to the primary account holder’s credit account. While you will have access to the account, it’s important to know that you have no ownership of that account.
It’s also worth mentioning that you don’t have to use the credit card to reap the benefits of your credit score rising as the result of being an authorized user.
Bearing this in mind, if the cardholder doesn’t feel comfortable trusting you with your own card, you will still benefit from being an authorized user that is linked to their account.
The answer to this question is yes – being an authorized user can affect your own credit. When you’re added as an authorized user to someone else’s credit card account, their credit can actually be beneficial to you.
Low credit scores won’t generally prevent you from being added to the account in question, and having your name on the account can actually help lift your scores if it’s reported to the three main credit bureaus.
That being said, it’s important to note that by being an authorized user, you are financially associated with the primary account holder.
With that in mind, you should really only become an authorized user on an account of someone who has a very good or excellent credit score and that you have a good relationship with.
Clear communication is important, especially as the primary account holder might not feel comfortable with you using their account for transactions.
In most circumstances, an authorized user has no liability whatsoever. While authorized users can make charges, they aren’t responsible for making bill payments.
The primary cardholder has complete liability and is responsible for making payments from their credit account.
That being said, it’s absolutely crucial for authorized users to show good financial habits when it comes to using someone else’s card. Not only is it common courtesy, but it’s important that you don’t spend beyond your means.
To be safe, you should always communicate clearly with the cardholder and inform them of your plans to pay off your balance on time and in full every month that goes by.
If the primary cardholder has died, and there is a debt to pay, an authorized user isn’t generally obligated to pay the debt, either. Credit card issuers usually report authorized users’ status to the three main credit bureaus – Experian, Equifax, and TransUnion.
You may be able to satisfy the debt collector that you were simply an authorized user by showing the collector the relevant portion of your credit report.
However, there is a caveat to this. If the authorized user makes a transaction to pocket the money themselves or knowing that the account holder is terminally ill – this could be considered as fraud.
Under this circumstance, if the creditor company can prove this is the case, the authorized user will be liable to pay.
Also, in this circumstance, the authorized user has behaved fraudulently and could therefore face serious consequences such as criminal charges.
Before making your first purchase as an authorized user, it’s important to know that no matter how much you spend with the card, the primary cardholder will be responsible for your charges. While you are under no legal obligation to pay the issuer, this doesn’t necessarily absolve you from the debt.
If they deem it appropriate to do so, the primary account holder could take legal action against you in pursuit of payment if you went back on a promise to pay them back.
This entirely depends on the credit card that you’re added to, as it can vary between creditors. While the process sometimes costs nothing at all, some credit cards charge a fee for authorized users.
You will need to do your own research into the credit card you are becoming an authorized user of to find out the specifics on how much it costs for you specifically.
In summary
Generally speaking, an authorized user isn’t responsible for credit card debt. The primary cardholder has complete liability and is responsible for making payments from their credit account.
However, as I discussed above, there are circumstances concerning fraud that can be an exception to this that could result in serious consequences.
When using someone else’s credit card as an authorized user, it’s important that you always spend within your means and communicate clearly with the primary account holder. Keeping a good rapport with them is important, as it is a mutually beneficial relationship.
