Prime Fico

Chapter 4: Managing Your Credit as an Authorized User

Becoming an authorized user on someone else’s credit card can be a savvy step toward a brighter financial future. Yet, it’s important to recognize that getting assigned is just the beginning of your journey. 

In this chapter, we’ll delve into the ins and outs of being an authorized user. This will include what you can and can’t do, as well as your responsibilities. By understanding these key points, you’ll be well-equipped to make the most of your status as an authorized user. Maximizing your time as one will pave the way for an improved credit score and a stronger financial footing.

What You Can and Can’t Do as an Authorized User

Understanding your rights and limitations as an authorized user is crucial for responsible financial management and maintaining a healthy relationship with the primary cardholder. This knowledge lets you use the card effectively while respecting the primary cardholder’s authority and account preferences. 

Additionally, being aware of what you can and cannot do helps prevent misunderstandings or conflicts with the primary cardholder and ensures compliance with the terms of use for the credit card account.

Can and can't do as an authorized user

Things that you are allowed to do as an authorized user of a credit card account:

  • Receive a physical credit card and add it to a digital wallet: You can obtain a physical card linked to the account and integrate it into digital payment platforms for convenience.
  • Use the card to make purchases online and in stores: You can make purchases using an authorized credit card online and at brick-and-mortar stores.
  • Get a cash advance or make a balance transfer: You can withdraw cash or transfer balances from the card under certain conditions.
  • Report your card lost or stolen and request a replacement: In case of a lost or stolen card, you can report it and request a replacement to maintain account security.
  • See your transaction history: Access to the transaction history allows you to monitor your spending and keep track of purchases made using the card.
  • Make payments on the account: You can contribute payments toward the outstanding balance on the account.
  • Dispute charges and request refund checks: If you encounter unauthorized or erroneous charges, you have the right to dispute them and request refunds where applicable.

Things that you won’t be able to do as an authorized user:

  • Become the primary cardholder: You cannot assume the primary cardholder’s status; you remain as an authorized user.
  • Change the mailing address, contact information, or account PIN: You lack the authority to modify account details such as address, contact information, or PIN.
  • Request a change to the credit limit or annual percentage rate (APR): Any alterations to credit limits or APRs must be initiated by the primary cardholder.
  • Add more authorized users: Only the primary cardholder has the authority to add or remove authorized users from the account.
  • Close the account: The decision to close the credit card account rests solely with the primary cardholder.

Responsibilities of an Authorized User

As an authorized user of a shared credit line, you have an important part in maintaining good management with the main account holder. Although legal responsibility doesn’t fall directly upon your shoulders, being active and responsible can greatly help lighten the load for everyone involved and create a harmonious financial relationship. 

Here are some suggested actions that will promote balance and security within your joint credit setup:

Keep Track of Expenses

Consistently monitoring your own purchases helps you stick to your set budget and avoid spending beyond what was planned. Not doing this may put stress on the primary cardholder and result in unforeseen bills or bank fees that can affect everyone involved. Remember, if the primary cardholder fails to make the payment on time, that late payment also gets recorded on your credit report.

Set-up Payment Methods

Establishing an organized way to pay back the primary cardholder (like automatic transfers or using money transfer services) makes sure obligations are met on time. It builds mutual confidence while reducing chances of missing due dates, ultimately protecting both individuals’ good credit standing.

Act Responsibly Financially

Practicing sound monetary behavior—such as limiting how much debt you take on and paying regularly—helps maintain healthy accounts. On the other hand, careless spending or delayed payments might harm relationships among those who share cards and possibly hurt their respective credit ratings.

Stay Informed & Share Updates

Keep yourself updated about messages sent by lenders and quickly inform the primary cardholder when necessary information arises. Doing otherwise risks forgetting deadlines, increasing costs through higher interest rates, and damaging each party’s reputation within the banking system.

Secure Your Credit Cards

Immediately report if there seems to be suspicious activity or lost access to your assigned card(s). Ignoring these signs puts at stake the safety of all linked funds and weakens trust between users. Additionally, failing to act swiftly exposes them to greater vulnerability against theft and identity scams.

Understanding the boundaries of your role as an authorized user is crucial for effectively managing the credit card. While you may not bear legal responsibility for the card’s expenses, your usage directly impacts both your credit scores. On top of that, it can affect also your relationship with the account owner. Therefore, exercising prudence and making informed decisions when using the credit card are essential for ensuring smooth operations and a healthy credit standing.

Always have an exit strategy

In the next chapter, we’re going to talk about what to do to stop being an authorized user. After you’ve built up a good credit history, you might want to get your own credit card. Sometimes, being an authorized user might not fit your needs anymore. We’ll show you how to remove yourself as an authorized user. This is an important step for moving on and managing your own credit in the future.

Next: Chapter 5: Removing Yourself as an Authorized User. Here, we’ll cover the reasons why you may want to stop being an authorized user. Furthermore, we’ll outline the necessary steps to remove yourself from the shared account while minimizing disruptions to your credit profile. Lastly, we’ll share strategies for continuing to improve your credit health after moving on from being an authorized user.