How to find the best authorized user credit card
Adding an authorized user to your credit card account isn鈥檛 a decision to be taken lightly. The potential danger聽is clear: A聽card user could rack up big bills that you didn鈥檛 approve, but which you still must pay.
One way聽to reduce that risk is with聽聽that let you set聽a聽spending limit for authorized users. Your options, however, are limited:
- American Express is the only major issuer we found that allows account holders of all its聽personal cards to set customized limits for authorized users, preventing them from accessing your entire credit line.
- While most of Citi鈥檚 consumer cards don鈥檛 let you set limits for authorized users, its Costco Anywhere Visa庐Card does.
- Many small-business credit cards also allow you to set聽spending limits for authorized users, which are usually employees.聽聽might be easier than you think.
Why don鈥檛 more do it?
鈥淎s a parent who someday plans to add my kids as authorized users on my credit cards, I wish more cards offered the option,鈥� says聽NerdWallet credit card expert Sean McQuay. 鈥淭hat said, I can see why it鈥檚 so rare.鈥�
First, most authorized users are spouses, for whom聽spending limits may not be聽appropriate. 鈥淪econd, banks actually have very little to gain from such an offering,鈥� McQuay says. 鈥淚n reality, they want to enable more spending, not less.鈥�
Whichever card you use, you鈥檒l be able to聽keep tabs on an authorized user whose spending may cause you concern, whether it鈥檚 a student or friend who鈥檚 building credit, or an employee.
Here鈥檚 what you need to know.
Who is an authorized user?
An authorized user has a separate card in his or her name and is able to tap the credit line of the primary account holder. Sometimes the authorized user is a spouse, who might not need restrictions. But some聽cardholders may add someone聽who is having difficulty qualifying聽for his or her聽own credit card due to poor credit or lack of credit history. For business owners, an employee could be an authorized user. The primary account holder must pay聽for all charges on the card and might want safeguards.
For ultimate control
As of mid-2016, American Express is the only major issuer that allows account holders of all its personal credit cards to place spending limits on authorized users.
You can set custom spending limits online or by contacting customer service. You can set a dollar amount for spending per billing period and receive聽emails or text messages when the user reaches that聽limit and when he or she is聽blocked from making more purchases. Limits can be changed or lifted anytime. Don鈥檛 have an AmEx?聽Check out聽.
One non-AmEx personal card, the聽, also allows custom limits. This feature is a holdover from the old TrueEarnings庐 Card from Costco and American Express. Costco switched its business from AmEx to Citi in June 2016.
Get down to business
Some small-business credit cards 鈥斅爄ncluding from American Express, Citi, Chase and Bank of America庐 鈥� allow you to set spending limits for authorized users. Rules for qualifying as a business differ among issuers. Accounts are intended for business purchases, and authorized users are typically employees. Check out NerdWallet鈥檚聽favorite聽, and verify with the issuer that it allows you to cap employee spending.
Trust but verify
If you have concerns about an authorized user, track his or her聽spending by logging into your online account and noting recent purchases. Some card issuers itemize charges聽by聽user, making it easy to聽.
Set email or text alerts for spending. Card issuers differ in what types of notifications they allow you to activate.聽Monitoring account activity won鈥檛 prevent overspending but will give you an early warning so you can quickly address problems with an聽authorized user.
Investigate whether your card has specific features that might help control the spending of authorized users. For example, Discover offers聽, an on-off switch that聽allows you to聽halt spending on the entire account, including that of authorized users.
Gregory Karp is a staff writer at NerdWallet, a personal finance website. Email:聽gkarp@nerdwallet.com. Twitter:聽.
This article first appeared at .
