What is an Additional Cardholder
An additional cardholder is an authorized secondary user added to an account by the primary cardholder. The additional cardholder generally gets to enjoy all the benefits of a debit or credit card account without any liability which remains the responsibility of the main cardholder. As a result, cardholders need to be very cautious about adding additional cardholders on any type of account. While some issuers allow friends to be added as additional cardholders, other issuers may restrict additional users to only immediate family members.
BREAKING DOWN Additional Cardholder
Additional cardholders can typically be added easily to a debit or credit card account. While this is a common offering available for accounts, there are certainly some pros and cons a primary account holder should consider before adding a user.
Adding an Additional Cardholder
To add an additional cardholder the primary cardholder must follow the steps designated by the financial institution. Most all financial institutions allow for additional cardholders and each has their own process. Financial institutions will usually only require that an additional cardholder be 18 years of age. Some processes for adding cardholders may be automated through the financial institution’s website. In some cases, a primary account holder might need to meet with a banking representative or speak with a representative over the phone. Generally, the cardholder will only need to provide basic information about the additional cardholder including name and date of birth. This process does not require an additional credit check. Once added the additional cardholder will receive their own debit or credit card. They will then be able to make transactions using funds from the account. Some institutions may allow for customizing the uses of funds by an additional cardholder through purchase limits or limits on available funds.
Adding an additional cardholder can be compared to opening a joint account. In a joint account multiple individuals have access to the account’s funds but both are liable for fees and expenses. Joint accounts will report delinquent activity to credit bureaus for both account holders. Joint accounts of all types can be beneficial for thin file or low credit score individuals since positive activity can help to improve an account holder’s credit history.
Additional Cardholder Considerations
There are pros and cons to adding additional cardholders to an account. One benefit for credit cards is the added rewards that are accumulated from card reward programs with additional spending. Adding a cardholder can also be easier than opening a joint account while still providing many of the same benefits for an additional card user.
There can also be a number of risks to adding a cardholder. One major consideration is the risk to the primary cardholder’s credit report. With additional cardholders, the primary cardholder has the sole responsibility for all payments and delinquencies which will be included on their credit report. Generally, an added user will also increase the number of transactions which can make budgeting more challenging. Also, some card issuers may add fees for additional cardholders. This can result in higher monthly or annual fee charges which increase the costs of an account.