“The more the merrier” doesn’t apply when adding multiple names to your credit card. Many issuers permit it, but the number allowed varies. While sharing an account with business associates, family members or loved ones can have benefits, consider all angles before charging full-speed ahead.
Joint vs. Authorized Users
Some credit card issuers offer joint accounts with shared responsibility of both ownership and debt. Current credit status is considered, and future credit history of all account members is affected. It’s a different story when you have authorized users linked to an account. Authorized users usually aren’t required to make payments, and if they run up charges that aren’t paid in time, it will adversely affect the primary account holder’s credit, but not theirs. Monitoring account activity and making sure payments are made in a timely manner, is essential to keep everything your account on track.
Adding college-bound children as authorized users to parental accounts gives them a means to cover expenses. There may also be an added benefit to being associated with a stellar parental credit rating, but don’t assume that. The spin-off effect may work to advantage only if the account is in good standing with a low balance compared to the total credit limit and no late payments.
Additionally, adding a spouse whose credit history isn’t great to the more fiscally successful spouse’s card might be prove to a successful strategy for some couples. Communication is key in this situation and creating a plan both spouses can stick to is important. If each partner has a different style for managing finances, you could find yourself split between who owes the debt.
Safeguard the Card
The after-effects of a faded romance, family squabbles or business failures can create serious financial tangles. Consider protecting yourself by limiting users and choosing a card with terms that prohibit them from changing the PIN number, closing the account, changing the address, adding other users or negotiating credit-line increases or percentage decreases. In the case of joint accounts, contact the issuer to find out how to close the account and cancel the card.
About the Author
Cyndi Perkins is an award-winning newspaper editor, columnist and reporter. Beginning her career in the 1980s, she has covered business, gardening, health, fitness, travel and parenting for international, national and regional publications.
This article is provided for general guidance and information. It is not intended as, nor should it be construed to be, legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.
Published by permission from ConsumerInfo.com, Inc. © 2014 ConsumerInfo.com, Inc. All rights reserved.