Is an Authorized User Responsible for Credit Card Debt?

An authorized user is generally not responsible for credit card debt. The primary cardholder signs the account agreement, so they’re the one legally responsible for the balance. Though becoming an authorized user could help you build a credit history, it comes with a few responsibilities.

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, one linked to the primary user’s account. You 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. When you buy, they pay. 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:

Minimum age to be an authorized user on a credit card

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.

Authorized user rules 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. This arrangement can let you piggyback on someone else’s good credit, giving you access to a credit card account you might not qualify for on your own. Either arrangement could also help you build a credit history.

There's a crucial difference between an authorized user and a joint account holder. A joint account holder is equally responsible for repaying 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.

Can an Authorized User Be Sued for Credit Card Debt?

No, an authorized user usually can't be sued for a credit card's unpaid balance. Credit card companies and debt collectors pursue the person who signed the account agreement. The primary cardholder carries that legal exposure, not the authorized user.

Even so, a debt collector might contact an authorized user to ask about the account. Contact alone doesn't create a legal obligation to pay. Possible exceptions: fraud, a separate repayment contract, an employer's corporate card policy, or a marriage in a community property state.

When Might an Authorized User Be Responsible for Debt?

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 fraud and may have legal consequences, 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 and say that 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 particular, marriage and death both affect an authorized user's potential responsibility for debt in specific ways.

How marriage affects authorized user status

An authorized user arrangement between spouses could simplify finances or help share card perks. In most states, authorized users aren't responsible for the debt, even when they're married to the primary account holder. Community property laws change this for spouses.

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 somewhere else.

The best way to avoid 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 generally takes priority over state laws.

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

Authorized users generally aren't responsible for any debt on the credit card account when the primary account holder dies. Two situations could still make you responsible for repaying that debt:

• 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 they incurred debt 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 pays outstanding debts before distributing remaining money to beneficiaries. In that case, your inheritance may be reduced by the amount of the deceased’s outstanding credit card debt. This would happen whether or not you were an authorized user on their credit card accounts.

Credit card companies generally can't take money from a life insurance policy with a named beneficiary. Not to pay off outstanding credit card balances. Though 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:

• Stop using the card. You’re committing fraud when you use the card after the primary account holder’s death. That could have legal consequences.

• Report the death to the credit card issuer. If the decedent's next of kin hasn't done so, contact the credit card issuer. 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. You don't need their permission to be removed. You simply call the credit card issuer and request your removal.

Removal may take a few days to go through. Then, the issuer will stop reporting the account to the credit bureaus. The account should leave 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. When you remove yourself from the account, it typically disappears as if it was never there.

How to Fix Your Credit After Authorized User Problems

Though people often become authorized users to boost their credit, the strategy isn’t foolproof.. An authorized user account could harm your credit if the balance climbs too high, if payments come in late, or if the account defaults. If the account isn’t helping you, you might 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 the process is taking too long, you may dispute the account with each credit bureau. 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. Damage from the account should reverse when the account disappears. Positive impact on your credit score will also reverse.

Pros and Cons of an Authorized User

The primary cardholder and authorized users share pros and cons. Authorized users have more limited benefits. Here’s a quick breakdown of both:

Pros and cons of authorized user

Benefits of an Authorized User Account

An authorized user arrangement may benefit both the authorized user and the primary cardholder. Mostly, the authorized user. Here are some examples.

Helps build credit history

An authorized user account could help someone with no credit or poor credit build a credit score.

Imagine John has a poor credit score. He's 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, on time each month. This should positively impact John’s credit score, even if he doesn’t use the account himself.

Provides convenience

Imagine John is in college and Sally wants to cover some of his day-to-day expenses. She adds him as an authorized user and gives him his own card with his name on it. The account and its financial responsibility remain Sally's. John may use the card. He doesn't receive the bill.

Easier access to a credit card

As an authorized user on Sally's account, John gets access to a credit card faster than applying on his own. The issuer may add him even without a strong credit history.

Benefits for the Primary Cardholder

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

Builds rewards faster

When Sally covers John’s expenses with her card instead of cash, she earns rewards points for his purchases.

Oversight on the authorized user's spending

Because John is an authorized user on her account, Sally may review his credit card charges on her statements. She may be able to guide him on responsible card use, which is especially valuable for spenders new to credit.

Risks for the Primary Cardholder

An authorized user arrangement carries risk, especially for the primary cardholder.

Financial responsibility

The primary cardholder is responsible for charges made by an authorized user. If John charges a pair of shoes, Sally would 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 gets maxed out. This is more likely when two people share the card, as miscommunication could lead to overspending.

Relationship strain

An authorized user arrangement could open the door to disagreements about spending habits and who's responsible for certain purchases.

Account holder could 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. Removing an authorized user without warning could strain the relationship between the two parties.

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 is usually less than the fee for the primary cardholder. Factor it into your decision before adding an authorized user.

How Becoming 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, an account with a long, positive payment history could help boost your credit scores.

Overdue payments or balances that climb too high could hurt your credit scores instead. Remove yourself as an authorized user to solve this problem. This also removes the account from your credit reports.

Before you join the account, ask the issuer whether they report authorized user accounts to the credit bureaus, so you know whether you'll benefit from the primary cardholder's good credit.

Protect Your Credit as an Authorized User

To protect your credit as an authorized user, be selective about whose account you join. Only become an authorized user if you trust the cardholder to make payments on time and avoid running up debts they can't pay off.

Set up online account access so you can track payments and balances on your account statements. Check your credit scores and reports every month.

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

Other Ways to Build Credit

An authorized user account has pros and cons. It isn't the right solution for everyone. Here are some other ways to build credit:

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

• 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 may be a way to get a credit card on your own. It requires setting aside 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 authorized user issues that affect your finances should disappear once you remove yourself from the account. For a more complex case, you might consult a professional.

If you're a joint account holder or the primary cardholder, you may be on the hook for the balance. A credit counselor, financial advisor, or professional debt settlement company could help you weigh your options for unsecured debt, such as credit card balances. Freedom Debt Relief explains how to get credit card debt relief if that debt becomes difficult to manage on your own.

Debt settlement may negatively impact your credit.