Authorized Users on Credit Cards: What You Need to Know

Many credit cards let you add an authorized user to your account.

For most people, the thought of giving someone else the power to spend your credit is downright terrifying; however, there are other reasons to add an authorized user, such as elevated rewards and travel perks.

Different banks use different terminology. You’ll see phrases like authorized user, additional cardholder, supplementary card, or secondary card, but these all refer to the same thing.

How Do Authorized User Cards Work?

A supplementary card generally has a different name and number on it, but is linked to the primary credit account.

It’s important to distinguish between the account and the cards: the account refers the primary cardholder plus any authorized users, whereas the cards refer to each cardholder individually.

Generally speaking, rewards and credit obligations are tied to the account, while benefits and access to information are tied to the cards.

Are authorized users the same as a joint account?

No. By adding an additional cardholder, you’re creating a card in someone else’s name on the same credit account. You’re authorizing them to make purchases on your account.

The primary cardholder is still responsible for paying all charges on the account. Even if a separate statement is issued showing only the secondary card’s transactions, the primary cardholder is ultimately liable for any purchases made on the account, including the authorized users’.

How are the cardholders’ credit reports affected?

In Canada, an authorized user’s credit report isn’t affected at all. The bank won’t do a credit inquiry to verify the secondary cardholder’s identity or creditworthiness. (There’s no additional inquiry for the primary cardholder either, if you add a card to an account that’s already open.)

Also, the card won’t appear on their credit report as a new account or impact their utilization. Instead, the total utilization, including spending by all authorized users, only affects the primary cardholder’s credit file.

Therefore, you can’t add an authorized user to help them build or rebuild their credit history. They need to be the primary cardholder to do this.

Basically, authorized users are nothing more than a name embossed on an extra piece of plastic (or metal). You could get one for literally anyone, and it’s smooth sailing as long as you pay the full balance.

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