Who can I add as an authorised user?

By Benjamin Salisbury

unused-credit-use-or-lose

Many credit card providers allow you to add an authorised user to your account. This allows another person, such as a spouse or adult child, to access credit without having to apply for their own card.

This is an attractive option for, say, teens heading to university who are relying on Mum and Dad to pay for books, so that they don't have to keep wiring money or sending cheques. Or, it can be a solution for partners who are trying to pay for joint expenses.

The authorised user's credit score is not affected by good (or bad) behaviour, but many people still find being or having an authorised user to be very helpful.

But who can you add as an authorised user? Does age, relationship to the cardholder or the authorised user's bank make a difference? Can you add more than one authorised user?

Here's everything you need to know about adding an additional cardholder to your credit account.

How do you add an additional cardholder?
You'll need to complete an authorised user application form from the card issuer. You will be asked for your card details, plus the full name, title, date of birth, address, country of nationality and country of residence of the additional cardholder. You also may be asked your relationship to the authorised user.

Some issuers require additional details from either you or the authorised user, such as bank details, or employment and marital status.

The card issuer also will ask you whether you want the new cardholder to have access to account information, and what type of actions they can perform, such as requesting statements or replacement cards.

Then, you both will be required to sign the form.

Who can you add?
"The additional cardholder must be aged 18 or over, a close family member, e.g., a parent, child or sibling, and must be living at the same address as the primary cardholder," a spokesperson from Virgin Money said in an emailed response to questions.

These stipulations apply at most banks.

So, if you are married, you should easily be able to add your spouse as an authorised user of your credit card account. It is also typically a straightforward process to add a live-in partner, even if you aren't married, since you have created financial associations through your shared address and accounts, such as utilities and council tax payments.

Most issuers do not require authorised users be a spouse or child, just that they are close family members.

"Different names are OK, as long as they are close family members and living at the same address," the Virgin Money spokesperson said. 

However, authorised users aren't always limited to family members.

For instance, according to a Lloyds Bank spokesperson, "the additional cardholder can be a British Forces Post Office resident. A cardholder can nominate an additional cardholder with a different surname or at a different address. In some cases, we may ask for ID and verification documentation."

Also, businesses can add employees as an authorised user of a company credit card account. Charities and churches also can add authorised users.

Do authorised users have to use your bank?
Most card issuers do not require the authorised user to use the same bank as you, but there are exceptions.

For instance, according to a Nationwide spokesperson, "for an additional cardholder to be added who does not currently hold any Nationwide accounts, we ask that they visit a Nationwide branch with identification to have a profile set up.

"This is also the case for additional cardholders that do not share the same address as the main account holder," the spokesperson added.

How many authorised users can you add?
The answer to this varies between card issuers, but usually, you can add up to three authorised users to your account. Each will have their own card and PIN.

After you add an authorised user
Once the process of adding an authorised user is complete, the authorised user will receive by post their own card with their name on it and they can make purchases as with any regular card.

However, the payments are solely your liability as the named cardholder.

You need to ensure that you can cover all users' expenses, and don't miss any payments, as it will be your own credit score that is adversely affected. You can arrange for the additional user to pay you directly to cover their spending. Some issuers, such as American Express, give the authorised user online access to the account to pay directly.

Your credit limit will be shared with the additional cardholder (or cardholders), so you need to think carefully about how you each spend. You can set up alerts so you can keep an eye on the balance.

If you add up to three other people are charging to the same account, you may find you are spending a lot more of your available credit than usual - and you may even breach the limit if you aren't careful.

You will receive one statement, but all cardholders' transactions will be listed so you can track who is spending what.

Finally, use the account to benefit both you and your authorised users.

While the account activity won't be reported to the authorised users' credit reports, if you practise good repayment behaviours, being associated with a well-managed account can be beneficial for them.

For instance, when the authorised user applies for a credit product of their own, they may be able to show proof of a well-managed credit card account with their name on it by showing the potential lender a statement with their name on it. If nothing else, the authorised user learns good spending and repaying habits, and can access credit when necessary, such as when making an online purchase.

And if you and the additional cardholders keep on top of payments, the additional spending can help you earn extra rewards, miles or cashback.

With careful planning and smart behaviours, adding an authorised user can be a win-win situation.

See related: What you need to know about being an authorised user; Beware ‘joint and several' agreements

Published: 3 August 2017