Just found out authorized user accounts can backfire hard

So I was reading through my credit card agreement yesterday and stumbled on something I never knew. I added my niece as an authorized user on my card last year to help her build credit. Turns out if she maxes out her card and misses a payment, it hits MY credit score too. Not just hers. I had no clue until I saw it in black and white. She's responsible so it's fine but man that could've been a disaster. Anyone else find this out the hard way?

3 comments

3 Comments

mitchell.thomas12d agoMost Upvoted

Actually, authorized user accounts don't work EXACTLY like that for most major issuers. The main cardholder is responsible for ALL charges on the account, including the authorized user's. But here's the thing - if you set a spending limit or lock their card through the app, they literally CAN'T charge more than that. I've done this with both my kids and their limits are like $200 each. The credit reporting part is what really matters though. Most banks report the account history to both your credit and the authorized user's, so a late payment hits you BOTH. But you can remove them as an authorized user at any time and that stops the reporting on their end immediately. Just something to double check in your card agreement because it varies a lot between banks.

mason.drew11d ago

Tried to be the cool aunt and added my nephew to my card. He bought $400 worth of anime figurines in one night. Learned a very expensive lesson about setting spending limits.

wadejenkins12d ago

Depends on the card issuer really. Some let you set spending limits for authorized users and you can get alerts for every transaction. Been there with my own niece and yeah it scared me at first but most card apps let you lock their card or set a low limit so its basically impossible to max out without you knowing. People freak out about this too much. If you got good habits and set up basic controls its not some huge trap. Plus you get all the rewards points from their spending which is a nice bonus. Just dont add anyone you dont trust or monitor the account once a week like a normal person would.