Adding someone to a credit card account is relatively easy if you want to authorize an employee to use a company card or help a family member in an emergency.Several considerations should be taken before, after, and during the process to avoid any accidents.
Step 1: There are pros and cons of adding an authorized user.
Someone can legally make charges using your credit card if you add them to your account.Before you grant another person access to your finances, you should know the pros and cons.There are many advantages to adding someone to your credit card account.If someone cannot apply for a credit card on their own due to poor financial history, it may be possible for them to learn how to manage their money and build a good credit score.In the event of an emergency, you can make sure someone has money.It is more convenient to have one credit card account.Adding someone to your credit card has drawbacks as well.You are legally responsible for all actions an authorized user takes.Both of you will be affected by missed payments or credit score damages.If there are issues with payments, blame comes into play, as shared accounts lead to strained relationships between users.
Step 2: A joint account holder is an authorized user.
If you add someone to your credit card, they're either a joint account holder or an authorized user.Depending on their status, the responsibilities and rights of this person change a lot.An authorized user doesn't have to pay back accrued loans if they use the credit card issued to them.When it comes to repaying the debt, joint account holders have as much liability as the original card holder.You have to decide if the person you're adding will be a joint account holder or an authorized user.
Step 3: The effect on your credit score is something you should be aware of.
Many people wonder if adding someone to a credit card will affect their credit score.Before making any decisions, you should understand this information.Credit reports don't usually give information on authorized users.Adding a user should not affect your credit score.You are responsible for any charges this person makes.You could end up with large debts if the new authorized user abuses their privileges.Your score will be affected by this.The credit score of the new user will be affected.If the credit card issuer reports authorized users, the account will appear on their credit report and can change for better or worse depending on your financial history.Both parties will appear on each individual's credit report when you add a joint account holder.Adding an authorized user will not affect your credit score.If there are outstanding charges, a joint account holder cannot be easily removed from the account.It is possible that your credit report will be affected more severely by damage done.
Step 4: Anyone can be added to an account.
Many people are surprised to know that anyone can be added as an authorized user on a bank account.Adding someone to your account puts you in an incredibly vulnerable position.If you have not established a personal or professional relationship with that person, you shouldn't add anyone.Someone who is invested in keeping the account's integrity intact should be your choice.The majority of authorized user relationships are between people.The more established your relationship is, the better.
Step 5: You can find the bank's policy.
You can add authorized users over the phone or online.Depending on your circumstances, your specific bank might have special requirements.Ask your bank how to add a user.You may have to go in to discuss the issue in person or fill out a paper application if you choose to do this over the phone or online.The bank should be able to answer any questions you have.Ask them how to remove an authorized user or joint account holder and what your exact financial responsibilities are in regards to the card's use.You're taking a risk by giving someone access to your finances.You should get as much information as possible.
Step 6: The needed information needs to be gathered.
Before you try to add the user, make sure you have all the necessary information.The user's name, date of birth, and social security number are required by most banks.Before setting things up, check their requirements to make sure you have everything you need.
Step 7: The ground rules should be in place early on.
Rules for the card's use need to be laid out to avoid misunderstandings that can lead to tensions between users.It's a good idea to put agreements in writing and have both parties sign them.In terms of charges and payment, explain your requirements.Do you think this person will follow spending limits?How much money is expected to be paid when the bill arrives?You should work through these issues early on.When can they use the card?Some people think their credit card should only be used for emergencies, while others think it's okay to charge rent and groceries to the card.Decide when the card can be used.How will you deal with a broken rule?Is there anything the new user could do that would cause you to remove them from the account?In regards to the card's use and when and why you might cut them off, be clear about your comfort zone.
Step 8: Don't plan for bad times.
Is it possible that someone will refuse to pay up?If there is an issue, you should have a game plan in place.If you set up account alert through your bank, you will be informed of any worrisome situations.This might be a good idea if you have concerns with the new user.What will you do if someone doesn't pay?Will you take legal action or just remove them from the account?If your relationship with the new user goes awry, you need to have a plan in place.
Step 9: Talk to the new user.
Don't let communication fall off once the account is set up.Dialogue about the card's use should be ongoing.It is helpful for some people to schedule occasional sit- downs to discuss how and when the card is being used.If there are disagreements, they can be solved once a month.Changes to the card's spending limit should be discussed.It is important to communicate with the card's new user in an open manner.
Step 10: The user must be removed if necessary.
It's possible to remove a user from your account if problems continue.Most places require a phone call or a written request to remove an authorized user.Some banks require a phone call and a follow-up request in writing.It can take more time if you're not the primary account holder.A sit down meeting with the bank is often needed when this is done in writing or with a phone call.Ask your bank if you can remove a joint account holder.