Difference Between Authorized User and Joint Account Holder

Triston Martin

Dec 31, 2022

If two individuals want to share a credit card, they can either open a joint account or create an authorized user arrangement. Who is legally liable for paying the bill differs significantly between an authorized user arrangement and a shared account. This is the primary distinction between the two. A joint account allows both parties to make purchases, but only one is legally accountable for paying the bill. An authorized user account allows both parties to make purchases, but only one is legally liable for paying the bill.

What Is an Authorized User?

A person granted permission to use your credit card to make transactions is known as an authorized user. They usually have their own duplicate of the card, issued in their name and linked to your account. However, the authorized user has no legal duty to pay the charge if it becomes due.

Most major credit card issuers will allow you to add authorized users to your account. Still, you should always double-check the issuer's policy on authorized users before applying for credit card.

Being authorized user on someone else's account may assist in enhancing your credit score, which is beneficial whether you are just beginning to create a credit history or are working to repair your credit. After you have been added as authorized user to the account, the complete history of the account will be reported to your credit reports if the card issuer records authorized-user activity.

Your credit score may suffer if the principal cardholder is late with a payment or has a high use rate. The good news is that you can withdraw from the account at any time if you no longer want to be an authorized user. After that point, the account will be deleted from your credit reports, and there will be no more negative repercussions.

You may become authorized user on someone credit card account before you become 18 years old, and the credit card issuer will not run a credit check on you. However, with certain credit card companies, the card's primary account holder may place spending limits on the card. As an added security measure, they might remove you from the credit card account without your permission.

What Is a Joint Account Holder?

The major borrower on a joint account, as opposed to an authorized user, is regarded as a joint account holder. You may apply with them as a co-borrower or co-signer rather than enrolling them as joint account holder after you have already applied for credit card, as you would with authorized user.

Being a joint account holder, as opposed to just being an authorized user, comes with a few additional privileges. For example, if you desire an account of your own but your credit is less than excellent, applying for the account alongside a family member or friend might increase the likelihood of being accepted.

However, most large credit card providers do not permit joint accounts for their customers. Things become more difficult when there are changes in the relationship between the people who have joint accounts, such as when there is a divorce. Closing the account requires both of your consent. In the end, if you are under 18, you will likely be approved for a credit account, even if you have a co-signer.

How to Determine Which Option Is Best

A few things to consider before adding someone as a joint account holder or later as authorized user on your credit card account. The actual playing card is an important aspect to take into account. You may not have the opportunity to open a joint account with the card of your choice since joint accounts are allowed by so few major card issuers. Also, consider the reason behind the composition of the arrangement. For instance, if you are a married couple, it could make more sense to create a joint credit account than to assist your adolescent child in establishing a credit history. If you seek to assist your adolescent child in establishing a credit history.

Monitor Your Transactions and Credit Score

If you want to avoid running up debt that you won't be able to pay off at the end of the month, it's important to keep tabs on your online account and your monthly expenses. This information is crucial whether to apply as a joint account holder or add an authorized user.

Additionally, it is essential to check your credit score regularly to monitor the effects the account has on it. For example, if you carry a large load from one month to the next, a lower credit score may indicate that you need to modify how you use your credit cards or impose limitations on their use.

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