Credit cards are useful financial tools due to their convenience, flexibility and great purchasing power. However, don't forget that they come not only with privileges, but with responsibilities too. If you borrow money, sooner or later you need to repay your debt. When you have an individual account, you alone are liable for paying off your balance. But what if you share a credit card with someone else? Find out what it means to be a joint credit card holder or an authorized user and who is responsible for credit card payments in each case.

Authorized Users

An authorized user is a person who has the right to use the credit card without the obligation to pay off the debt. Authorized users don't sign the credit card application form indicating that they accept the terms and the responsibility to pay off the debt.

Typically, authorized users are family members: unmarried couples living together or teenage children. For example, you can add your daughter who is going to college in another state. She will receive a plastic with her name on it, but only you are liable for paying off everything she will charge.

As a credit card owner, you can add authorized users at any time. Some credit card applications have a space for requesting an additional credit card with the other person's name on it, or you can call or write to your bank and request one.

A year ago becoming an authorized user was a great way for people with no credit to build a credit history. Unfortunately, this strategy doesn't work anymore even if you're the person who makes the monthly payments. That is because Fair Isaac Corporation has stopped considering the credit history of authorized credit card users in its scoring formulas. There was just too much fraud connected with this feature.

Joint Accounts

Joint credit cards mean that people who share the account are equally responsible for making payments. This type of credit cards is typically opened by married people. Even though each person may have their own plastic with only his or her name on it, both people are still responsible for the debt.

As long as there is a remaining balance on a joint credit card, you and your partner have to make regular on time payments. In fact, the spouse who did not make purchases is not responsible to pay them off. However, the credit card issuer may legally require you to eliminate the debt if your partner defaults.

If you have a joint account, a credit company reports all payment history in both names. If your spouse has late payments, defaults or collections, they will also appear on your credit report and damage your credit score.

If you share a credit card account with another user, examine the agreement to verify your status: a joint credit cardholder or an authorized user. Thus you will be sure who is legally liable to make payments.

Copyright © 2007-2009 www.unioncreditreport.com. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Share Opinion:

           

Comments

Jason Garver, 07:17 AM, July 16, 2008
I like the idea of an authorized user more - you can spend money and don't pay it back!

If you have something to say, please leave your comments below.

Your Name: *
Your Email:
Your Comment: *
Enter Number from Picture: *
* - Required Fields