The days for easy credit lines such as those issued to subprime borrowers have long been gone. Now the bank expects you to have built a solid payment history or charges you outrageous rates and fees to make up for the non-payment risk. But there is still a loophole for underbanked individuals to get a plastic card relatively easily and use it to borrow money. It is the additional cardholder (authorized user or secondary card holder) who gets lawful access to credit account funds even if there is no score in his/her name, no job or decent income. Traditionally requested by parents for their children’s personal use and credit education, additional credit cards could be an easy source of funds for no score adults, as well.

What is an additional credit card? Whom does it benefit most and what are its advantages and pitfalls? Any major bank card and even cards with instant approval (such as those from Discover and American Express) offer the primary applicant to authorize an additional user on their account. If you agree, the issuer will request all the necessary information to confirm that person’s identity and be sure that it is in no form a fraud. Then the card is sent out to the additional cardholder who becomes the user of the same account that you applied for. Naturally, all the benefits of the primary user’s card, such as low APRs, no annual maintenance fees and rewards apply to the secondary account. But there arises a question: does the authorized user really take advantage of the low rates and no fees if the authorized user is legally not responsible for any card costs including even penalty charges? The secondary user can only spend with the card and is only morally obliged to make monthly payments.

The same is about the rewards. The secondary user is eligible to earn point rewards or cash back on their card purchases, but the amount earned on the secondary account is then combined with the primary account. Only the primary user can redeem the rewards.If the primary and authorized users are close relatives, say a parent and kid, or if the holders have a special agreement, they can easily use the rewards for their common benefit. The major benefit of owning an additional credit card is evidently the possibility for a young person under 18 to start their own credit history. Some banks report the primary holder’s payment records on the secondary user’s account. If a parent is a responsible payer and prudent spender, it may benefit the child greatly and help him/her on the way to a healthy credit standing in the future.While they are relatively easy to get, additional cards should not be treated as such. According to the recently introduced by Fair Isaac new rules, adults who purchase place on the good credit accounts will no longer be able to improve their bad credit this way. Only when it is the parent’s decision to help their child build its credit history, a separate credit file will be established and reported to.

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