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Valued Member
wwtthhpp
Posts: 57
Registered: ‎02-12-2009
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Authorized User and Joint Accounts

I have questions about these two things.

1. What are the differences between the 2 types?

2. How do they affect credit for the users?

The reason I am asking is that I'd like to add an authorized card on one of my credit accounts that is relatively new and the person had credit problems, including bankruptcy, in the past but after reviewing and talking to them I KNOW I can trust them with this new responsibility.

Will being an authorized user on a newer card with a $5000 limit help the person in any way?
Valued Contributor
bs6054
Posts: 1,673
Registered: ‎11-11-2012
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Re: Authorized User and Joint Accounts

Simply put, a joint user is responsible for the account (if the other user defaults, the entire debt is owed by the joint user), whereas an AU has no such responsibility.

 

Joint Users will certainly have their account reported to CRAs.  Several banks do do this for AUs as well, but  you need to check first.   If it is reported, making someone an AU establishes a credit line and history.   This can help FICO score, but for things like mortgage, it is probably ignored.

Valued Contributor
bs6054
Posts: 1,673
Registered: ‎11-11-2012
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Re: Authorized User and Joint Accounts

Also, if you are in the "churning" game, the advice is to avoid joint accounts.  That way, each spouse/partner can get their own instance of each card with associated bonuses.  To be extra safe, some avoid adding the spouse/partner as AU as well, so that there is no question that both can get the card.

Established Member
chexxie
Posts: 23
Registered: ‎02-05-2010
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Re: Authorized User and Joint Accounts

Authorized users get the benefits of the CC but are not responsible for keeping the account in good standing.

Joint account holders are both responsible for keeping the account in good standing, both of you would be liable for the debt incurred. They are part owners.

 

If your util is low on that card it will help them as far as %util. I added my cousin (whom has no credit) as an AU to 2 of my CCs and had to remove her from the one with higher util when I realized it wasn't helping her. The one card I still have her as an AU on has below 7% util and it helps her. Also helps that it's an older card.

 

If the person is coming from bankruptcy and are seeking to app for a new CC on their own anyway I don't think it matters that your card is a new card. You'd also be saving them from adding a new INQ to their report if they were going to get a CC.

Secured cards are a good option for rebuild credit. You might also want to check out that forum for some more infromation.

 

Note: Even though you trust them, if they don't actually need the use of the credit but just the boost to their report then you don't even need to give them their card, as it will be mailed to you. I believe in some cases you can even opt to not get a card for your AU. I didn't give a card to my cousin.

 

Hope this helps.

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Established Contributor
distantarray
Posts: 2,112
Registered: ‎09-25-2011
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Re: Authorized User and Joint Accounts

Personally I wouldn't trust anyone who screwed up their credit a lot in the past with $5,000 unless that's chump change to you, I would however get a Amex card and add them to that, because Amex allows you to control their spending limit. You can set their limit to whatever you want 500+ (maybe lower) this way they can only screw you over on that much. Becareful $5,000 is a lot of money, and don't worry it still reports on their credit at your full limit so it still helps their score.


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drkaje
Posts: 3,491
Registered: ‎07-25-2008
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Re: Authorized User and Joint Accounts


distantarray wrote:

Personally I wouldn't trust anyone who screwed up their credit a lot in the past with $5,000 unless that's chump change to you, I would however get a Amex card and add them to that, because Amex allows you to control their spending limit. You can set their limit to whatever you want 500+ (maybe lower) this way they can only screw you over on that much. Becareful $5,000 is a lot of money, and don't worry it still reports on their credit at your full limit so it still helps their score.


Amex will hold ACMs liable should there be a default.

 


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Revelate
Posts: 9,750
Registered: ‎12-30-2011
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Re: Authorized User and Joint Accounts

[ Edited ]

drkaje wrote:

distantarray wrote:

Personally I wouldn't trust anyone who screwed up their credit a lot in the past with $5,000 unless that's chump change to you, I would however get a Amex card and add them to that, because Amex allows you to control their spending limit. You can set their limit to whatever you want 500+ (maybe lower) this way they can only screw you over on that much. Becareful $5,000 is a lot of money, and don't worry it still reports on their credit at your full limit so it still helps their score.


Amex will hold ACMs liable should there be a default.

 


That wasn't the case on the Zync and I'm not sure on others either.  From the cardholder agreement:

 

Promise to pay

You promise to pay all charges, including:
● charges you make, even if you do not present your card or sign for the transaction,
● charges that other people make if you let them use your Account, and
● charges that Additional Cardmembers make or permit others to make.

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Senior Contributor
drkaje
Posts: 3,491
Registered: ‎07-25-2008
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Re: Authorized User and Joint Accounts

@ Rev,

 

The ACM agreement used to say something along the lines of 'Using the card is an agreeing to accept responsibility for your charges'. Things could have changed, I haven't read the agreement on my Delta and DGF isn't an AU on my BCP.

 

USAA is worse, though. AUs can add AUs!

 

Personally; I feel it's a little wrong-minded for people to assume no responsibility for their own spending.


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Revelate
Posts: 9,750
Registered: ‎12-30-2011
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Re: Authorized User and Joint Accounts

Kage,

 

The BCP is line item identical in the card holder agreement.  I completely agree with you on the presumption of no responsibility and Amex may well chase the ACM first, but if they flake, the original member is left holding the bag.  Amex's collection agency in this case I suppose heh.

 

As for USAA's policy, :smileysurprised:

 

I rather blankly forwarded through the T+C and other things applying for their Rewards MC lately, not that I plan to have any AU's in the conceivable future, but wow.

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drkaje
Posts: 3,491
Registered: ‎07-25-2008
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Re: Authorized User and Joint Accounts

@ Rev,

 

There's also no way to apportion the CL with USAA.

 

Loosely worded from cardholder agreement page 13: "An authorized user shall have the same authority as a cardholder to (1) make purchases, balance transfers, or cash advances; (2) access account information; and (3) authorize others to use the account" blah blah blah "To terminate an authorized user, a cardholder must first notify us and then request a new account number. if a cardholder chooses to keep the same account number, you understand that we cannot prevent the person from continuing the use the account and you agree that any further use by the person will remain authorized"

 

On page 12 it says they will try collecting from the AU should account holder fail to pay. Among blah blah it says "This means we may, at our sole option, collect the entire account balance from any one of you, or we may collect a portion from each of you"


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