Is an Authorized User Responsible For Credit Card Debt?

If you’re an authorized user on someone else’s credit card account, you might be wondering are you, as an authorizer user, responsible for the credit card debt on the credit card? We will answer this question in much detail below.

Is An Authorized User Responsible For Credit Card Debt?

No, an authorized user is not responsible for credit card debt on a credit card. That said, merely because an authorized user is not responsible, does not mean that there are no consequences if the account goes unpaid. If the primary account holder does not make his payments on time, the delinquent payments will appear on both the authorized user’s credit report and the primary account holder’s credit report, significantly lowering both of their credit scores. So, only add yourself as an authorized user on another person’s account if you know that they are responsible enough to make their payments on time and keep their credit utilization low.

An authorized user is like a guest on your credit card. They enjoy using your credit card, but they are not liable for making payments on the debt on the account. If the primary cardholder does not make his or her payments on time, the missed payment marks will be added to both the authorized user’s account and the primary account holder’s account.

The missed payments will show up on the authorized user’s account because the account status is usually reported on both the primary account holder’s credit report and authorized user’s credit report, causing both the primary and authorized user’s credit score to go down.

That said, although most card issuers report negative items onto an authorized user, not all do. For example, American Express does not report negative items on an authorized user’s credit report. But, most financial institutions do report negative items onto an authorized user’s credit report, so be careful whose account you add yourself onto.

If the primary account holder misses payments or racks up a lot of debt, utilizing too much of his or her available credit, your credit score could suffer.

How Does Being An Authorized User Work and How Does it Affect Your Credit?

Before a user can become an authorized user, a person (primary account holder to be) must apply for a credit card. After a person applies for account, his credit report and score will be reviewed. If he is creditworthy, his credit application will be approved. The primary account holder is responsible for making payments on the account. The primary account holder typically has the ability to add authorized users to his account. Authorized users can use a credit card just as the primary account holder can, but an authorized user is not responsible for paying the account.

That said, merely because an authorized user is not financially responsible for the account, this does not mean that he will not suffer consequences if the account is left unpaid. The primary account holder will be responsible for the debt, and the authorized user, although not responsible for repayment, will have a negative mark added to his credit report if the account is not paid on time because the account is likely to be reported on an authorized user’s credit report, bringing down his credit score.

An authorized user is not liable for the debt on the account because the contractual agreement that stipulates payment is typically only between the financial institution issuing the credit card and the primary account holder. The authorized user is simply a guest on the account when it comes to repayment of debt.

Do All Credit Card Issuers Allow Authorized Users?

Most card issuers allow credit card account holders to add additional users on their accounts as authorized users. Authorized users are issued a credit card linked to the primary cardholder’s account that shows the authorized user’s name on the account. Authorized users are allowed to legally make purchases on the account without being held liable for the debt on the credit card. The primary account holder remains liable for any charges made to the card. As such, cardholders should be careful who they add as an authorized user because they are legally obligated for any transaction made on their credit card account by an authorized user. So, make sure you understand this before you add another person as an authorized user.

Here are some of the things that an authorized user can do after they’re added onto your account as such:

  1. Make purchases of goods and services using the credit card that’s issued to them at physical retail stores
  2. Make online purchases
  3. Add the credit card to their phone and utilize tap to pay
  4. Withdraw cash from ATMs as a cash advance on the credit card
  5. Remove themselves from the account at any time

Here are some of the things that authorized users are not permitted to do:

  1. Change the information on the account, including mail address and/or associated phone numbers
  2. Close the account
  3. Increase the credit limit of the credit card
  4. Add additional authorized users

Authorized User vs Joint Account Holder

You should determine whether you’re an authorized user on an account or an account joint holder. This distinction is important because it determines whether you’re liable for debt on the account. A joint account holder and a primary account holder are both liable for the debt on a credit card. This is so because they were both listed on applicants when they applied for a credit card. This means that there is an agreement between both parties to make payments on the account and so both are responsible for any debt on the credit card.

That said, an authorized user is different from a joint account holder because an authorized user is merely permitted to use the card and is not legally responsible for paying the debt on the card. If you were added to another person’s account after they opened the account, you are an authorized user. However, if you applied for a new account with another person, you’re a joint cardholder, meaning you’re responsible for the debt on the credit card.

Frequently Asked Questions (FAQs)

1. Are authorized users responsible for the debt after death?

No, authorized users are not responsible for credit card on the account after the death of the primary account holder. Only the primary account holder and joint account holder (if any) are responsible for paying the debt on a credit card account.

2. Does making someone an authorized user hurt my credit?

No, making someone an authorized user does not hurt your credit.

3. Do authorized users get their own bill?

Most card issuers do not send an authorized user on a credit card a bill. This is so because only the primary account holder is liable for the debt on the account.

4. Do you need a social security number to add an authorized user?

Some card issuers and financial institutions require a social security number to issue a credit card to an authorized users, and others do not. So, it really depends on the financial institution you have your credit card with.

5. Does adding an authorized user result in a hard inquiry?

No, adding someone as an authorized user does not usually result in a hard inquiry.