Some credit cards offer what's called an Authorized User Bonus. This is when the primary account holder gets extra bonus points when they add an additional spender to their credit card account. It's a great way to get a quick boost in points, yet it's one of the most underutilized methods of getting a quick top up!
So why don't people (and up until recently, myself!) take advantage of these practically free points? Probably because of the conversations and confusion that arise with the person you want to sign up! Here are some of the most common questions to which many don’t know the answers:
Q: Will being an authorized user make me ineligible for my own First Time Cardmember Signup Bonus?
Some folks think that becoming an authorized user may make them ineligible for the initial signup bonus of their own. Fair concern! Afterall, when they become an authorized user they get a card with their name on it don't they?
A: Authorized users can still open their own separate primary account, and get the full sign up bonus. The reason is that authorized users, which are different from cosigners, are not financially responsible for the debts of the account holder. Because of this, not only can an authorized user actually help the primary cardmember earn points, they can then sign up for the card themselves, get the signup bonus, and even sign someone else up as their authorized user to earn bonus points themselves!
Q: Is my credit at risk as an authorized user?
Some people worry about how an authorized user account will affect their credit. Although not financially responsible for debt, being added as an authorized user does go on your credit history. This can work in the user’s favor or against it. Depending on whether or not the primary account holder pays their bill on time, that same credit effect (good and bad) goes on the authorized user's credit history as well. Assuming the primary account holder is good with their credit card spending, this is a great way to help someone build their credit history and improve their FICO score.
My Thoughts and Strategy
If you happen to be getting (or just got) a card that has an authorized user bonus option, sign up a close friend or family member—who you trust—before the offer runs out! You get a little boost usually worth at least $50 dollars on average and the user still has the opportunity to sign up for the card themselves. You can even return the favor by becoming their authorized user! Once a signup bonus is earned, I would go as far to say the authorized user never has to use it the card again. This is a great for couples, parents, and siblings looking to get closer to their shared travel reward goals.
Of course, only give authorized cards to people you trust to spend wisely and make sure your expectations are clear as to how the card is to be used and paid back. At the end of the day you, the primary cardmember, is responsible for any purchases made on the authorized card, and your credit is at stake.
Continuing to Use Authorized User Cards for Purchases
One important thing to note is that I usually would vote against continuing spend on the authorized user card as it usually more financially beneficial to have that other person sign up for the card themselves – unless it's meant to help build their credit.
However, it can be beneficial to use the authorized user's card if you want to meet a particular spend bonus for the year. (e.g. The American Express Delta Platinum Card offers 10,000 extra SkyMiles when you spend $25,000 in one calendar year).
What Cards Offer Authorized User Bonuses?
Most Chase cards including the Chase Sapphire Preferred, United MilagePlus Explorer Card, and Chase Freedom card all offer bonuses of some sort for adding an authorized user.
No comments:
Post a Comment