topic Re: CCCs pushing AUs hard, any downside? in Credit Cards

CCCs pushing AUs hard, any downside?

Anonymous — Wed, 16 Dec 2020 15:48:37 GMT

I've noticed for the last year or so that many CCCs are really pushing the addition of an AU to accounts. I get hit with this any time I end a call or end chat with quite a few of them like Amex & Citi for example. I'm wondering if there is any downside to the addition of an AU from the lender perspective. I would guess that any downside is outweighed by the positive, or they wouldn't be pushing them so hard. I suppose the obvious benefit would be greater revenue through greater overall spend and that you've got 2 people to hold accountable in terms of getting paid back. Just looking for some additional insight on this topic.

Re: CCCs pushing AUs hard, any downside?

gdale6 — Wed, 16 Dec 2020 15:55:44 GMT

Some banks care about the AU others dont. They are pushing them so they can increase their profits not to benefit you. An AU is not responsible for repayment of any charges you are even if they dont pay.

Re: CCCs pushing AUs hard, any downside?

Anonymous — Wed, 16 Dec 2020 16:08:00 GMT

Yeah I guess I sort of misspoke in terms of 2 people being held accountable... more that there are 2 people that have the ability to pay, which benefits the lender. It would be the primary holding the AU accountable. 100% correct that they are pushing them for profits and not for the account holder.

So, any downsides from the lender perspective?

Re: CCCs pushing AUs hard, any downside?

blindambition — Wed, 16 Dec 2020 16:16:19 GMT

They have been pushing them hard. I don't think there's a downside, but that's if account and legitimate users are handling accounts properly and responsibly.

There have been closures and account locks, once someone added AU. Most of those cases have had other issues that caused red flags. Like I added my mom, my neighbor, and cousins friend who lives 3500 miles away... Why did they close my account???

Re: CCCs pushing AUs hard, any downside?

Curious_George2 — Wed, 16 Dec 2020 19:00:31 GMT

The closures that Blindambition references came to mind for me too. It seems like a bit of a minefield. Lenders promote these, but then take AA against some people for some of the AUs they add. So I guess they see... fraud risk? Scoring algorithm abuse risk? Apparently in the lenders' eyes, there are good AUs and bad AUs, but they are intentionally secretive about the difference. So we cardholders can only guess who will be which.

I dislike that guessing game, so I have decided to take the cautious approach and steer clear of all new AU arrangements.

Also, though not responsive to your question, I dislike giving or receiving AU status because it complicates FICO management. The AU all-zero penalty is so annoying!

Re: CCCs pushing AUs hard, any downside?

Anonymous — Wed, 16 Dec 2020 19:04:43 GMT

When you add an AU, what sort of information is provided? Do different lenders have different rules regarding AUs, like who it can/can't be? I've never added an AU nor have I ever been an AU, so I know nothing about them.

Re: CCCs pushing AUs hard, any downside?

dragontears — Wed, 16 Dec 2020 19:08:55 GMT

@Anonymous wrote:
When you add an AU, what sort of information is provided? Do different lenders have different rules regarding AUs, like who it can/can't be? I've never added an AU nor have I ever been an AU, so I know nothing about them.

Depends on the lender, some like chase you just need to give the AU name, others like Amex and Cap1 require the AU SSN.

Re: CCCs pushing AUs hard, any downside?

Loquat — Thu, 17 Dec 2020 08:57:15 GMT

For the sake of the topic I will say that Bank of America is known to scrutinize AUs a bit harder than most. And by scrutinize meaning they want you to really know the person you're adding. I've read on a few occasions of them shutting accounts down for folks rapidly adding AUs to their account.

Not sure if this is still a thing now as it's been a bit ago that I read such, but something to be mindful of.

Re: CCCs pushing AUs hard, any downside?

FalconSteve — Thu, 17 Dec 2020 08:59:50 GMT

AUs can increase spend, but they are not accountable for any balance.

Only joint account holders are accountable, otherwise, you could add someone as an AU, rack up a huge balance and make it their problem.

Re: CCCs pushing AUs hard, any downside?

GApeachy — Thu, 17 Dec 2020 09:34:38 GMT

I think all banks love the additional swipe fees. Plus they have access to AU's personal info. and can target them with offers.

Re: CCCs pushing AUs hard, any downside?

ChargedUp — Thu, 17 Dec 2020 10:58:44 GMT

@Loquat wrote:
For the sake of the topic I will say that Bank of America is known to scrutinize AUs a bit harder than most. And by scrutinize meaning they want you to really know the person you're adding. I've read on a few occasions of them shutting accounts down for folks rapidly adding AUs to their account.

Not sure if this is still a thing now as it's been a bit ago that I read such, but something to be mindful of.

^^^ This is exactly what came to my mind as I read the OP's post. BoA seems especially sensitive to who you add as an AU. My wife is AU on all my cards and none of my lenders have even blinked. I have a couple of my daughters on CFU, BCP, CSP and Savor and I haven't had any issues there either.

Honestly, as long as whoever you add is semi-immediate family, I would think you're ok. The problems seem to mostly come up when adding friends, neighbors, caretakers and other people that you might not necessarily have a household bond with.

Re: CCCs pushing AUs hard, any downside?

coldfusion — Thu, 17 Dec 2020 12:15:52 GMT

@ChargedUp wrote:
@Loquat wrote:
For the sake of the topic I will say that Bank of America is known to scrutinize AUs a bit harder than most. And by scrutinize meaning they want you to really know the person you're adding. I've read on a few occasions of them shutting accounts down for folks rapidly adding AUs to their account.

Not sure if this is still a thing now as it's been a bit ago that I read such, but something to be mindful of.
^^^ This is exactly what came to my mind as I read the OP's post. BoA seems especially sensitive to who you add as an AU. My wife is AU on all my cards and none of my lenders have even blinked. I have a couple of my daughters on CFU, BCP, CSP and Savor and I haven't had any issues there either.

Honestly, as long as whoever you add is semi-immediate family, I would think you're ok. The problems seem to mostly come up when adding friends, neighbors, caretakers and other people that you might not necessarily have a household bond with.

That's because there is a greater probability of unethical practices in play that we don't discuss here when there are AUs who are not immediate family members. Getting caught gets your account(s) closed and a free membership to their blacklist.

Re: CCCs pushing AUs hard, any downside?

UpperNwGuy — Thu, 17 Dec 2020 14:10:22 GMT

@Anonymous wrote:
I've never added an AU nor have I ever been an AU, so I know nothing about them.

This describes me as well. I often wondered what I would have done if any of my children had asked to become an AU. Fortunately, they got their first credit cards on thair own without my help.

Re: CCCs pushing AUs hard, any downside?

Remedios — Thu, 17 Dec 2020 15:16:29 GMT

My kids are AUs, each on a few accounts. If they weren't, they would have debit cards, which means I'd miss out on rewards. I implicitly trust my children.

Because she was allowed to spend money, log in and pay cards (if I don't teach him, who will?) my daughter has developed interest in other aspects of finances, and right now has a personal banker at US Bank. She wanted me to open her an account there, and in mere four weeks, she will be finally old enough to start investing.

I doubt any of that would have happened had she not been allowed to play grown up money wise at an early age.

I don't have any other immediate family in the US, so that's as far as AUs go for me.

Re: CCCs pushing AUs hard, any downside?

Anonymous — Thu, 17 Dec 2020 15:33:59 GMT

That's a good thing if you're able to trust your AUs without question. Me personally, I think I've been burned too many times in the past.

While not exactly the same thing, but I've co-signed on loans 2 different times for people and have been left stuck with their debt when they stopped paying. Trust for me as a result is always going to be a hard sell.

Anyone have an opinion as to why CCCs have really been pushing the AU thing so strong lately relative to the past? I mean, it's always been a positive thing for them in terms of more profitability. It just seems recently it has been more of a focus than in the past. As I said in the original post, it's definitely across many lenders, not just anyone in particular.

Re: CCCs pushing AUs hard, any downside?

GApeachy — Thu, 17 Dec 2020 15:39:06 GMT

@Anonymous I have noticed an uptick in various ccc emails reminding us to add AU's. Perhaps they, the ccc's, are wanting the swipe fee's now more than ever and with only one person to choke by the collar would make it a little juicier for them.

Re: CCCs pushing AUs hard, any downside?

Anonymous — Thu, 17 Dec 2020 16:07:09 GMT

From a lender perspective, I think the only downside of adding an AU (apart from the minute cost of adding a card etc!) is the increased possibility of default, if the AU overspends and the main account holder cannot pay. But that is a risk on any account, balanced against expected income from swipe fees + any interest charges and annual fees.

Re: CCCs pushing AUs hard, any downside?

Anonymous — Thu, 17 Dec 2020 17:14:11 GMT

@Anonymous wrote:
That's a good thing if you're able to trust your AUs without question. Me personally, I think I've been burned too many times in the past.

While not exactly the same thing, but I've co-signed on loans 2 different times for people and have been left stuck with their debt when they stopped paying. Trust for me as a result is always going to be a hard sell.

Anyone have an opinion as to why CCCs have really been pushing the AU thing so strong lately relative to the past? I mean, it's always been a positive thing for them in terms of more profitability. It just seems recently it has been more of a focus than in the past. As I said in the original post, it's definitely across many lenders, not just anyone in particular.

Sometimes AU users are AU users because they have trouble getting credit on their own, and for good reason. Outside of someone trying to establish credit, granting someone as a AU puts you at risk of the card being used and the AU won't pay you back. That's one considerable downside.

Maybe they are pushing AUs more because their revenue stream has hit a snag, thanks to COVID. They understand the additional risk to them granting someone an AU, but they got the rock solid cardholder who cares about their credit and would be willing to pay for any charges the AU makes who might normally wouldn't pay them as an individual cardholder. Revenue has taken a hit and they are looking for additional ways to get more swipes.

Re: CCCs pushing AUs hard, any downside?

NoHardLimits — Thu, 17 Dec 2020 19:41:24 GMT

@Anonymous wrote:
@Anonymous wrote:
That's a good thing if you're able to trust your AUs without question. Me personally, I think I've been burned too many times in the past.

While not exactly the same thing, but I've co-signed on loans 2 different times for people and have been left stuck with their debt when they stopped paying. Trust for me as a result is always going to be a hard sell.

Anyone have an opinion as to why CCCs have really been pushing the AU thing so strong lately relative to the past? I mean, it's always been a positive thing for them in terms of more profitability. It just seems recently it has been more of a focus than in the past. As I said in the original post, it's definitely across many lenders, not just anyone in particular.
Sometimes AU users are AU users because they have trouble getting credit on their own, and for good reason. Outside of someone trying to establish credit, granting someone as a AU puts you at risk of the card being used and the AU won't pay you back. That's one considerable downside.

Maybe they are pushing AUs more because their revenue stream has hit a snag, thanks to COVID. They understand the additional risk to them granting someone an AU, but they got the rock solid cardholder who cares about their credit and would be willing to pay for any charges the AU makes who might normally wouldn't pay them as an individual cardholder. Revenue has taken a hit and they are looking for additional ways to get more swipes.

I agree with @Anonymous. Credit card revenue streams are generally lower due to the pandemic. This is especially the case with travel/dining/entertainment focused cards. For banks, additional AUs could be seen as a way to generate more swipes without increasing much risk.

As far as downsides for AU cardholders, the first thing that comes to mind is the possibility of running afoul of "too many new accounts" if the age of the account is too young. If you add an AU to a 6 month old card, the AU now has an tradeline that is 6 months old. If you add an AU to an Amex card, the AU now has a tradeline that is brand new (0 months old). This could have a negative effect when considering things like Chase 5/24 rules.

Re: CCCs pushing AUs hard, any downside?

Anonymous — Thu, 17 Dec 2020 19:45:21 GMT

I've been wondering if applicants get a better chance of approval and/or a higher credit limit if adding an authorized user.