Additional Cardholder: Overview and Examples in Credit Cards

What Is 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 primary cardholder.

As a result, cardholders need to be very cautious about adding additional cardholders on any account. While some issuers allow you to add friends as additional cardholders, other issuers may restrict additional users to only immediate family members.

How Additional Cardholder Works

Additional cardholders can typically be added easily to a debit or credit card account. While this is a standard offering available for accounts, there are certainly some pros and cons a primary account holder should consider before adding a user. When you want to add cardholders, the primary cardholder must follow the steps designated by the financial institution. Most financial institutions allow for additional cardholders, and each has its process.

Financial institutions will usually only require that an additional cardholder be 18 years of age. Some procedures for adding cardholders are 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.

What You Need to Know

Generally, the cardholder will only need to provide necessary information about the additional cardholder, including name and date of birth. This process does not require a further credit check. Once added, the additional cardholder will receive their debit or credit card. They will then be able to make transactions using funds from the account.

Additional Cardholders and Joint Accounts

Adding another 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 low credit score individuals since positive activity can help to improve an account holder’s credit history.

Pros and Cons of an Additional Cardholder

There are pros and cons to adding additional cardholders to an account. One benefit of credit cards is the added rewards that are accumulated from card reward programs with extra 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 are some potential 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.

Special Considerations

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.