Is An Authorized User Responsible For Debt?

Becoming an authorized user on someone else's credit card can be a smart way to build or improve your credit. This works best when:

• The main cardholder has good credit habits

• The credit card company reports authorized users to credit bureaus

When both conditions are met, being an authorized user could give you access to credit if you're not able to get a card on your own. It could also help you create a good credit history, which is important for getting your own credit accounts in the future.

Authorized users can benefit from the primary cardholder’s good credit use. This means that if they pay their bills on time and keep their balance low, your credit score could benefit, too. If the primary account owner misses payments or runs up a high balance, it could hurt your credit score.

You're not the one ultimately responsible for paying the bill.

Being an authorized user comes with responsibilities and some risks. It’s good to understand what those are before you decide whether being an authorized user would be right for you.

What Is an Authorized User?

An authorized user is someone who’s been added to another person’s credit card account but without any administrative access. As an authorized user, you get a card with your name on it linked to the account. You could use the card to make purchases in person and online.

The primary account holder is the only one legally responsible for the account and any debt. In other words, they’re ultimately on the hook for making payments. You'll need to work out your own payment plan with the account holder if you intend to make purchases as an authorized user and pay for them yourself.

Authorized user rules vary a lot by issuer. For instance, some issuers require authorized users to be a certain age, while others have no minimum:

Additionally, some credit card issuers offer tools for controlling authorized user spending, such as setting spending limits for each user. Without these tools, both the primary and authorized user need to be careful not to overspend or exceed the credit limits.

Authorized user rules can even vary based on the specific credit card. High-end travel or lifestyle credit cards often charge annual fees for each authorized user. In return, authorized users typically get access to card perks or benefits.

Is an Authorized User Different From a Joint Account Holder?

Yes, an authorized user and a joint account holder are different. A joint account holder typically has more responsibility than an authorized user.

Authorized users and joint account holders can both use a credit card along with another person. The arrangement can be a way to piggyback on someone else’s good credit, which can give you access to a credit card account you might not qualify for on your own. Either arrangement can also help you build a credit history. 

However, there’s a crucial difference between an authorized user and a joint account holder. A joint account holder is equally responsible for paying the debt. This is true no matter which account holder spent the money on the credit card. 

In contrast, authorized users aren’t typically responsible for making payments on the account. Issuers can't go after an authorized user for repayment.

When Might an Authorized User Be Responsible for Debt?

Every rule has a few exceptions. Here are some common reasons you might be responsible for credit card debt as an authorized user:

• You became an authorized user through fraudulent means. The key part of authorized user is the word authorized. Adding yourself without permission is considered fraud and can have serious legal ramifications, starting with being on the hook for any money you spend.

• You entered into a repayment contract with the primary account holder. The cardholder agreement may not be the only document that matters. If you enter into a separate contract with the account holder saying you'll repay your debts, that contract may hold legal weight.

• You used a company credit card for personal/unauthorized expenses. Or you have a corporate card with an individual liability clause. Rules around business and corporate credit cards vary based on company and issuer policies, as well as state laws.

In marriage and death, you may have some responsibility for someone else's credit card debt. Let's dive into those separately.

How marriage affects authorized user status 

Adding a spouse as an authorized user could make a lot of sense for simplifying finances or sharing perks. And in most states, authorized users won't be responsible for the debt even if they're married to the primary account holder.

However, that changes if you live in a community property state. A community property state considers all property and debt acquired during a marriage to be shared equally by both spouses—including credit card debt.

If you live in a community property state, you’re responsible for any credit card debt your spouse runs up while you’re married (and vice versa). You don't even need to be an authorized user for these laws to apply.

The nine community property states are:

• Arizona

• California

• Idaho

• Louisiana

• Nevada

• New Mexico

• Texas

• Washington

• Wisconsin

In addition, Alaska, Florida, Kentucky, South Dakota, and Tennessee allow couples to opt in to community property agreements.

Registered domestic partnerships in California, Nevada, and Washington may also be subject to community property laws.

How to avoid shared debt in community property states

Community property laws apply if you live in a community property state—even if you were married in a non-community property state.

The best way to avoid being subject to community property laws if you live in a community property state is to have a prenup, or prenuptial agreement. A prenup that fairly lays out ownership of each debt can generally take priority over state laws.

Are Authorized Users Responsible for Debt After the Cardholder’s Death?

Authorized users aren't generally responsible for any debt on the credit card account when the primary account holder dies. However, you could be responsible for repaying credit card debt on a dead person's behalf in two cases:

• You're married to the account holder. If you live in a community property state, you may be responsible for your spouse’s debts after they die if the debts were incurred during your marriage. This could apply to any credit card account, whether you were an authorized user or not. 

• You’re a beneficiary of the account holder’s estate. The estate usually has to pay any outstanding debts before distributing any remaining money to beneficiaries. In that case, you may find your inheritance reduced by the amount of the deceased’s outstanding credit card debt. This would be the case whether or not you were an authorized user on their credit card accounts.

Generally speaking, credit card companies can't take life insurance policy money with a named beneficiary to pay off outstanding credit card balances. However, if the insurance policy is paid out to the estate (which is rare), creditors could demand repayment.

What to do when the primary account holder dies

If you're an authorized user on a credit card and the primary account holder dies, immediately:

1. Stop using the card. Knowingly using a credit card when the primary account holder is dead is fraud and can have legal consequences.

2. Report the death to the credit card issuer. If the decedent's next of kin hasn’t done so, contact the credit card issuer to inform them of the primary account holder's death.

At this point, the issuer will likely close the account and your permission as an authorized user ends. If there’s a balance on the card, contact the executor of the decedent's estate so they can take care of the bill.

How to Remove Yourself as an Authorized User 

The primary account holder needs to add you to the account, but you don't need their permission to be removed. You can simply call the credit card issuer and request your removal from the account.

It can take a few days for the removal to go through. Then, the issuer will stop making new reports on the account to the credit bureaus. The account should come off your credit report entirely within a few weeks. 

When you close an account and you’re the primary account holder, it stays on your credit report as a closed account for up to 10 years. This isn't the case for authorized user accounts. Removing yourself from the account typically makes it disappear as though it was never there. 

How to Fix Your Credit After Authorized User Problems

An authorized user account is often used to boost your credit, but that’s not guaranteed to happen. Being an authorized user could harm your credit standing if the account is maxed out, payments are late, or the account goes into default. If the account isn’t helping you, you can solve the problem by removing yourself as an authorized user.

Once you're removed, the account should eventually stop showing up on your credit reports. If you don't want to wait—or it's simply taking too long—you can dispute the account with the credit bureaus. You'll need to contact each bureau individually and let them know the account doesn’t belong to you.

Once the account is gone, it will no longer impact your credit scores. Any damage from the account should reverse when the account disappears, but so will any positive impacts to your credit score.

Pros and Cons of an Authorized User

The primary cardholder and authorized users have some overlapping pros and cons, but authorized users have more limited benefits. Here's a quick breakdown:

We'll go over all of the pros and cons of being an authorized user below.

Benefits of Being an Authorized User

Having an authorized user on a credit card has certain benefits—especially for the authorized user. Here are some examples.

Helps build credit history

Being an authorized user could help a person with no credit or poor credit build their credit score. 

Let's say John has a poor credit score, but is taking steps to improve it. John’s mom Sally, who has good credit, adds John as an authorized user on her credit card account. The creditor reports the account's balance and payment history on both John’s and Sally’s credit reports. Sally consistently pays the balance off, and always on time. This should have a positive impact on John’s credit score even if he never uses the account.

Provides convenience

Now let’s say that John is in college and Sally wants to cover some of his day-to-day expenses. She adds John as an authorized user and gives him his own card. It has his name on it, but it’s still Sally’s account and her financial responsibility. John can use it, but he doesn’t get the bill. 

Easier access to a credit card

John qualifies for a credit card much faster as an authorized user on Sally's account. They can request a card for him even without a good credit history.

Benefits of Adding an Authorized User

Here are the perks of putting an authorized user on your account. 

Builds rewards faster

By letting John use her credit card to cover expenses rather than just giving him cash, Sally gets rewards points for his expenditures.

Oversight on the authorized user’s spending

By having John as an authorized user on her account, Sally can spot his credit card charges on her statements. She can give him guidance about how he’s using the card, which can be especially valuable to someone learning good credit habits.

Risks of Adding Authorized Users

Having an authorized user carries benefits and risks—especially for the primary cardholder.

Financial responsibility

The primary cardholder is responsible for any charges made by an authorized user. If John charges a pair of shoes, Sally would have to foot the bill, because she’s the primary cardholder.

Potential credit damage

If a payment is late, the credit scores of both the primary cardholder and authorized user could suffer. The same is true if the credit limit is maxed out, which could happen more easily if two people are using the card. 

Relationship strain

Taking on an authorized user opens the door to disagreements over spending habits and who’s responsible for various purchases.

Account holder can remove the authorized user at any time

A primary cardholder has the right to remove an authorized user at any time. This means the authorized user doesn't have control over their own credit access. It could strain a relationship if the primary account holder removes the authorized user. 

There may be an extra fee

Whether a credit card issuer charges an extra annual fee for an authorized user varies by company. The annual fee may be less than the fee paid for the primary cardholder, but it’s still worth consideration.

How Being an Authorized User Could Affect Your Credit

When you become an authorized user, most credit card issuers will start to report the account's payment history and balance information to your credit reports. If you have limited credit history, adding an account with a long, positive payment history to your credit report could help boost your credit scores.

On the flip side, if payments are past due or the balance gets too high, the account could negatively impact your credit scores. Removing yourself as an authorized user—and the account from your credit reports—can solve this problem.

Credit card issuers report authorized user accounts differently, and sometimes not at all. If you want to benefit from the primary account holder’s good credit, make sure you’re added to a card that will be reported to the credit bureaus (call the issuer to ask). 

Protect Your Credit as an Authorized User

The most important part of protecting your credit as an authorized user is being selective about whose account you join. Only become an authorized user if the cardholder is someone you trust to make payments on time and avoid running up debts they can’t pay off.

Also set up an online account so you can keep track of payments and balances on the account statements. Keep an eye on your credit scores and reports every month, as well. You can get free credit scores from most card issuers.

If you notice a sudden change in your credit scores, it could be a sign that something's amiss. Check your credit report to figure out the source of the problem. You can get free credit reports each week from AnnualCreditReport.com.

Alternatives to Being an Authorized User to Build Credit

Being an authorized user has pros and cons, and it isn't the right solution for everyone. Here are some other ways to get access to a credit card:

• Sign on as a joint account holder. Each account holder has equal responsibility for payments. It may make sense if you both share household expenses anyway. 

• Open a secured credit card. These cards are available to people with more limited or poor credit because they require a refundable deposit as collateral. It can be a way to get a credit card on your own, but it requires tying up some money for the deposit. 

• Use a student or other credit-builder credit card. Some credit cards are designed specifically for people with poor or limited credit records. They typically have lower credit limits than other credit cards.

Whether you become an authorized user or try some other method of building credit, enter into it with your eyes wide open. The better you understand what’s involved, the better your chances of building a successful credit history. 

When Professional Help Makes Sense

Most issues with being an authorized user that can impact your finances should disappear when you remove yourself from the account. If you have a more complex case, it may be worthwhile to consult a professional.

If you're dealing with credit card debt and are a joint or primary account holder, you may need to repay part or all of the debt. You can consult a credit counselor, financial advisor, or professional debt settlement company to discuss your options.