John Roska: Authorized credit card use, responsibility explained

Q: How does it work if someone adds me as authorized user of their credit card? Do I get a card, or just get to borrow theirs? Am I liable for my purchases? Could I be liable for their bill if they don't pay?

A: Authorized users should get a card, in their name. They can charge whatever they want, and aren't liable — at least to the credit card company. The cardholder can terminate someone as an authorized user at any time, and there's nothing the user can do about it.

Mostly, then, authorized users get the benefits of credit card use, and none of the burdens.

Cardholders can add whomever they want as an authorized user. Parents commonly make kids authorized users, but it also can be boyfriend, roommate, caregiver, etc.

The credit card company issues a card to the authorized user, in their name. It's sent to the cardholder, so they can decide whether to let the authorized person really use it.

Authorized users only get to use the card, and usually only for charges — not cash withdrawals. They can't change the terms of the account, or add other users.

That's because only the cardholder has a contract with the card issuer, and why only the cardholder is liable for the bill. Authorized users have no contract, and no liability.

The card company, then, will seek payment only from the cardholder. If the cardholder doesn't pay, they can't come after authorized users.

It's different if someone is added as a joint account holder, instead of just an authorized user. Joint account holders do have a contract with the card issuer, just like any other cardholder. They're jointly liable for the bill. The credit card company will seek payment from them, and any other joint account holders.

With authorized users, then, the cardholder is not just the primary account holder. They're the only account holder, and the only target the card company can aim at for payment. With joint accounts, multiple people can have primary liability. That gives the card company multiple targets.

On top of liability-free use of the card, authorized users can also improve their own credit records. The account holder's good payment history can rub off a bit (but not much) on the authorized user, while a bad payment history won't affect the authorized user's credit record at all. Their credit can't suffer because they're not liable for payment.

A cardholder might try to collect from the authorized user, try to enforce an oral agreement the user made to pay for their share, or try to enforce some kind of implied contract, or a right to contribution toward a shared expense. But the credit card company can't do that.

What about just letting another person use your card? It's not illegal, but probably violates your contract with the card issuer. It probably also violates a merchant's agreement with a card issuer, which is why the merchant shouldn't let it happen.

John Roska is a lawyer with Land of Lincoln Legal Assistance Foundation. You can send your questions to The Law Q&A, 302 N. First St., Champaign, IL 61820. Questions may be edited for space.

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