Exploring Cross-Border Financial Support for Family in India - Seeking Your Expertise

[Adams]

Dear myFICO Community,

I trust this message finds you in good health. I am currently facing a unique financial scenario and would be immensely grateful for your expert insights and guidance.

Scenario:
Let's consider a hypothetical scenario involving an Indian national currently residing in the United States. This individual is gainfully employed in the U.S. and earns a steady income. Their heartfelt desire is to financially assist their family, who resides in India, in a meaningful way. To achieve this, they are contemplating a cross-border financial strategy that involves issuing credit cards to their family members in India, leveraging the individual's U.S.-based income and credit history. The primary objective is to empower their family members in India to spend.

Specifics:

1)The credit cards will be exclusively issued to family members in India, facilitating their transactions and expenditures within India.
2)The credit limits and eligibility criteria for these cards would primarily hinge on the income and credit history established by the individual in the United States.
3)The individual intends to meticulously manage and settle all credit card bills promptly from the United States, thereby ensuring that the credit card debt is consistently paid off in full.

My Questions:

1)In the context described, is it indeed feasible to assist one's family in India through this unique financial arrangement? I kindly request your valuable insights and expertise on this matter.
2)Will the family members in India be eligible to enjoy any credit card rewards, or will these benefits accrue solely to the individual in the United States?
3)Is it accurate to presume that the credit score of the individual in the United States will be impacted in any way by this cross-border financial initiative? Please share more insights into it.
4)Are there any prospective legal or financial considerations that demand attention within this cross-border financial arrangement?
5)Could the favorable payment history established through these credit cards potentially influence the credit scores of family members in India?
6)Are there any specific considerations or best practices that should be observed to optimize the effectiveness of this financial strategy?

I wholeheartedly understand that navigating cross-border financial matters can be intricate. My utmost priority is to ensure that this undertaking is beneficial to my family members while upholding financial responsibility and strict adherence to all relevant regulations.

Your unparalleled expertise and insights would be an invaluable compass in steering through this situation effectively. I extend my sincere gratitude in advance for your esteemed guidance and assistance.

Warm regards,

[JoeRockhead]

It's feasible to do what you're talking about but there will be some things you need to consider. The family members would have to be added to your Credit Cards as authorized users. More importantly, some credit card companies will allow authorized users without an SSN, others simply will not. Assuming you find one or more lenders that allow this, any benefits in regards to points redemptions or claiming cash back will likely remain solely with the account holder.

The credit score of the account holder will be affected by however they ultimately manage the account since it will be solely their financial responsibility for all charges made on the accounts, therefore, it will have no effect on the authorized user(s) especially being that they live in another country.   

[Adams]

Thanks for the reply. I know that it is possible to add authorized users using SSN inside a country. But the scenario I am talking about is the holder sits in the US and wants to add authorized users from a different country, say India. Is cross-border authorization to credit cards allowed and do you know of such banks which provide such cards?

[JoeRockhead]

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@Adams wrote:

Thanks for the reply. I know that it is possible to add authorized users using SSN inside a country. But the scenario I am talking about is the holder sits in the US and wants to add authorized users from a different country, say India. Is cross-border authorization to credit cards allowed and do you know of such banks which provide such cards?

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Yes, I understand that the account holder would be in the U.S. and the Authorized Users would be in India. Them using the cards shouldn't be an issue either. As I stated in my previous reply, the main issue you are going to face is they (AUs) don't have an SSN so you will have to find lenders who will allow authorized users without an SSN. Some major lenders that don't require an SSN for AUs are Capital One, Citi, Chase and Barclays... HOWEVER, they may have other requirements such as proof of citizenship or proof of residency within the U.S.

It's going to require more research on your part to find the right lenders who will allow what you are trying to do. You can very simply start calling different lenders' customer service departments to inquire specifically about what their particular policies are regarding requirements for Authorized Users residing outside the U.S.

[ForwardLooking]

This is a good way to possibly find yourself and family members in trouble with the laws of both the USA and India.  There are tax laws in both countries around gifting, inflows, and outflows.  If it appears as if you are trying to avoid taxes to the governments, this could affect your resedency status or put you in a tough situation if you return to India. I would not advise doing this without consulting a financial adviser or lawyer specializing in money transfers between the two countries.

[Adams]

The intention is to help spend money across the border and not to avoid taxes, but I'll surely consult financial experts and lawyers in this case. Thank you so much.

[DSTforlife]

in addition to what others have said, they will also have to consider any fees and currency fluctuations for the authorized users card.  More than likely, the cards will be issued with USD as the base currency.   This opens the primary cardholder up to potentially incurring foreign transaction fees in addition to exchange rate fluctuations.  However, most importantly, the primary cardholder needs to ensure they are not breaking any international banking/financial laws.

IMO, the safest move is for the person in the US to learn the credit system in India and work to get family members their own credit cards...and offer to pay the bill monthly.

[tebtengri]

I have added my wife as AU to a couple of US based cards that charge no international fees and she uses them without issue abroad. She has no SSN/ITIN currently.

As she's my wife the repayment aspect is moot as they're household expenses I'd pay anyway. An additional benefit is she has some small data reported to US bureaus and I'll update her AU data with an ITIN when she has one.

Good luck with your endeavors that sound somewhat similar.

[tebtengri]

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@ForwardLooking wrote:

This is a good way to possibly find yourself and family members in trouble with the laws of both the USA and India.  There are tax laws in both countries around gifting, inflows, and outflows.  If it appears as if you are trying to avoid taxes to the governments, this could affect your resedency status or put you in a tough situation if you return to India. I would not advise doing this without consulting a financial adviser or lawyer specializing in money transfers between the two countries.

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I've often wondered about this when asked "do you have more than $10000 in cash etc" when crossing a border.

I've never had that much but with accounts and cards that have that much on deposit or that much in credit - I'm sure lots of people travel with such cards. I think if cards mattered they'd have long ago added them to the warning to declare.

Unless the people are parents/guardians or spouses it probably isn't a bad idea to consult an attorney in both countries though just to be safe.