Consumer Affairs: Pros and Cons of Being an Authorized User on a Credit Card
Austin Capital Bank CEO and founder and creator of FreeKick Erik Beguin is quoted in this article on pros and cons of being an authorized user on a credit card.
View the complete article here: https://www.consumeraffairs.com/finance/pros-and-cons-being-authorized-user-on-a-credit-card.html
Pros and cons of being an authorized user on a credit card
By Holly Johnson
Published April 28, 2023
Edited by Tammy Burns
Being an authorized user on another person’s credit card can be advantageous when you can’t qualify for credit on your own. Not only do you get a credit card with your name on it that you can use to make purchases, but you can access valuable credit card perks that wouldn’t be available to you otherwise. Perhaps most importantly, an authorized user card can build your credit history, so you can qualify for your own card one day.
If you have the chance to become an authorized user on another person’s credit card and you trust that person completely, this situation can work in your favor. That said, you should have your eyes wide open and a full understanding of what could go wrong.
Key insights
What is an authorized user?
When someone applies for a credit card, they get an account in their name and a physical card to use. They also have the option to add another person to their account as an authorized user.
While authorized users also get a physical credit card with their name on it, only the primary account holder is legally responsible for repayment. Because of this, anyone who becomes an authorized user should make sure they understand how and when their purchases need to be paid back.
Lisa Fischer, the chief lending officer at the fintech company Mission Lane, says it’s crucial for authorized users to demonstrate responsible credit habits if they want to avoid conflict. For the most part, this means tracking spending and only charging purchases they can afford.
“If you run up a bill that can’t be paid off by you or the cardholder, for example, this will negatively impact both of your credit,” she said. “This could cause financial strain as well as strain on your personal relationship with the cardholder.”
… continued at:
https://www.consumeraffairs.com/finance/pros-and-cons-being-authorized-user-on-a-credit-card.html
