Joint Credit Card Account vs. Adding an Authorized User

Getting married or joining households with your significant other? While some new couples may consider opening a joint credit card account, others may prefer to add a new spouse to their existing account as an authorized user. While both options allow shared access to credit, there are significant differences between the two.

What’s a Joint Credit Card Account?

Joint credit cards mean both applicants share equal rights and responsibility for paying the balance on the account, regardless of who incurred the charge. They’re based on information from both applicants’ credit files, including each person’s credit history and score, as well as their income and debt ratios. Account activity on joint credit cards affects both cardholders’ credit files.1

What Does “Adding an Authorized User” to My Credit Card Mean?

Adding an authorized user means that you, as the primary account holder, give permission for someone else to buy things or take cash advances from your credit card account by means of their own supplementary card. However, you’re fully responsible for all charges incurred on this account. As the primary account holder, you may cancel an authorized user card by contacting Discover directly.2 With Discover, any authorized user or named joint account holder may receive a Discover credit card with his or her name embossed on the back.

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How Will a Joint Credit Card Account or Adding an Authorized User Affect My Credit?

As a joint account holder equally responsible for the charges and balance of the account, it’s no surprise that your credit rating will be affected by both positive and negative account activity. However an authorized user’s credit file may also be impacted by the credit card’s activity and usage.

A authorized users may see a boost in their credit rating if the main credit card account holder makes all payments in full and on time. Yet if the account holder has a spotty payment record, it may have a negative impact on the authorized user’s credit. This is because your credit report includes not only your own credit accounts, but those for which you’re identified as an authorized user.3

Which Shared Credit Card Option is Best?

Think carefully before applying for joint credit as a couple, or adding your new significant other as an authorized user on your existing account. The best option depends on your credit ratings and histories, debt ratios, income, as well as your personal preference.

Do your research when it comes to shared credit cards. While Discover offers both the joint account and authorized user options for sharing a credit card account, some credit card issuers don’t offer joint accounts, according to personal finance site Nerdwallet.4 In either case, it’s important to realize that as a joint account holder or primary account holder, you’re responsible for all charges on your account, whether they’re made by you, an authorized user, or another joint account holder.

Resources:

1. http://www.consumerfinance.gov/askcfpb/1289/do-joint-credit-card-accounts-with-my-spouse-affect-my-credit-score.html

2. http://www.discover.com/credit-cards/cardmember-agreement/your-account.html

3. http://www.creditkarma.com/article/how-being-an-authorized-user-affects-credit

4. http://www.nerdwallet.com/blog/tips/credit-score/difference-between-authorized-users-and-joint-cardholders/

Legal Disclaimer: The articles and information provided herein are for informational purposes only and are not intended as a substitute for professional advice. 

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