What you need to know about being an authorised user

By Marianne Curphey

In the UK, you cannot jointly apply for a credit card. However, you can add an authorised user to your account for, say, a significant other or an adult child. This allows another person to use your credit card account. But who is liable for the debt - and what benefits are there to adding an authorised user?

There are a few reasons to add an authorised user to your credit card account.

"It can be useful if you have a rewards card, for example, and are collecting points," says Andrew Hagger, founder of the money information service MoneyComms. "If there is someone else who does the household spending, then they could use the card to collect points, too."

If you are in a marriage or serious relationship, sharing a credit card account may make handling your finances easier, or perhaps you just want your partner to be able to make purchases with your card if the need arises. If you have older children (18 years or older) who you are introducing to credit, you may want to add them to your credit card account so they can get used to using a card.authorised-users

Regardless of the reason you add an authorised user, it's important to remember that, as the primary cardholder, you'll have sole responsibility for paying off the balance, Hagger says. The authorised user has all the same spending power as you, with none of the liability.

"So you need to be careful not to end up adding someone as an authorised user and then bailing them out all the time because they can't afford to pay you back for their spending," he says. The only way to limit how much your authorised user can spend is to lower the credit limit on the account.

James Jones, head of consumer affairs at Experian, describes it as "like giving someone else your cash". That is fine for couples who manage their finances together, but might not be ideal if you fear someone might end up piggybacking on your account and running up debt.

Authorised users get no debt liability - and no credit
That's not to say that being an authorised user doesn't have drawbacks. Hagger says the main one is that authorised users don't build up their own credit rating. Adding an authorised user "doesn't create an account in their name on a credit report, and it does not link their credit history to yours," says Jones. The only credit score affected is that of the main account holder.

Now, this may work out in the favour of the main account holder. Say you and your partner both spend equally on your credit card account. Your partner repays you for everything he spends each month, so you pay your balance in full every month. This will look excellent on your own credit - but it won't help your partner's credit at all.

Having a good record of borrowing and paying back responsibly is very important when applying for any form of credit in the future, so your authorised user may run into roadblocks if the only credit card they have is yours.

If you were to split up, or if you should die, and your partner doesn't have credit of his own, he's suddenly left starting from scratch. The same goes for adding your 18-year-old - until she gets her own credit card, her credit score will still be as though she has never used a credit card in her life.

"Ideally, if you are young or if you don't have a card yourself, then you should be considering getting your own credit card in your own name so that you build up and add to your own credit history," says Hagger.

See related: What to consider before adding authorised user, What's mine is yours -- unless we split up, Handling a loved one's debt after death

Updated: 22 March 2017