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Being an authorized user on a credit card might seem to be a win-win proposition, but sometimes it can hurt you when applying for your own credit card. Before you agree to be an authorized user, you need to consider which credit card you want to apply for and their application requirements.
When Being an Authorized User is Harmful
Are you familiar with the Chase 5/24 rule?
If you have you’ve opened at least 5 new credit card accounts in the past 24 months–either as a primary or authorized user– Chase will most likely automatically decline your credit card application on select Chase credit cards.
This is why if you’re just starting out maximizing travel rewards credit cards it’s best to start with the Chase products below.
It doesn’t matter if all five of those credit cards are with Chase or spread evenly between the various credit card companies. The good news is the self-imposed Chase 5/24 rule doesn’t apply to every Chase credit card.
Chase 5/24 Credit Cards
Chase’s 5/24 rule will affect you for these credit cards:
- Chase Sapphire Preferred benefits
- Sapphire Preferred
- Sapphire Reserve
- United TravelBank
- United Explorer
- United Club
- Southwest Rapid Rewards (Personal and Business)
- Marriott Rewards Premier (Personal)
- Freedom Unlimited
- Ink Cash
- Ink Preferred Business
If you plan on applying for any of these credit cards listed above, you will want to say “No” to being an authorized user this time. Or, you will need to wait until the oldest of the five most recent credit card accounts is at least 24 months old. You can check your credit score for free from CreditKarma to view account length history.
Apply for These Chase Credit Cards Over the 5/24 Rule
Being over the 5/24 rule won’t affect your application status with these Chase credit cards:
- British Airways Credit Card
- Disney Credit Card
- Hyatt Credit Card
- IHG Rewards Club Credit Card
- Marriott Rewards Premier (Business)
- Ritz-Carlton Rewards
Some Chase products like the Sapphire Preferred will give the primary cardholder an extra bonus of 5,000 points if they add an authorized user in the first 3 months of membership and they make a purchase in the same time period. This is a nice way to get an extra 5k points and maybe build up some credit history for the authorized user. Being an authorized user on a credit card won’t hinder that person from applying for their own version as long as they are under the 5/24 rule.
The Primary Cardholder Doesn’t Pay the Balance
The good thing about being an authorized user is that you’re not responsible for paying the monthly bill, even when you do 100% of the spending. If the primary cardholder forgets to pay the bill, your score isn’t negatively affected like his.
Even though your score isn’t affected negatively, a past due balance can still raise red flags with your future credit applications. After all, you’re still associated with the credit account and the lender or credit card company might ask you questions on why the balance isn’t paid.
You Want To Build Your Credit Score
Being a primary cardholder is one of the quickest ways to improve your credit score. With a no annual fee credit card, you can build your credit score free and earn rewards in the process.
When Being an Authorized User is Helpful
Besides the Chase 5/24 rule, being an authorized user is more helpful than harmful when the credit card balance is consistently paid on-time.
Potentially Improve Your Credit Score
While you’re not responsible for paying the balance–even for your own spending– being added as an authorized user adds a credit account to your credit history. Having one account on record tells credit card companies you have experience with owning a credit card.
Credit bureau policies are continually changing, but being an authorized user to a current account can improve your score. You might see a small initial dip in your score, but you score will soon return to its previous amount. By making on-time payments, your credit score can climb a few points. Since your not responsible for making the monthly payment, it might not be a huge increase but it’s better than nothing.
Free Access to Card Benefits
Depending on the relationship you have with the primary cardholder, being an authorized user lets you enjoy free benefits without paying a second annual fee.
In some instances, it can also be an easy way to bypass the 5/24 rule. For example, your partner can apply for the Chase Sapphire Preferred when the 5/24 rule disqualifies you and then he adds you as an authorized user and you can also partake in these benefits:
- Pool your rewards points
- Spending from both cards count toward the $4,000 spending requirement to earn the sign-up bonus
- Chase gives you a free 5,000 point bonus for being an authorized user.
Chase Ultimate Rewards points can be transferred to a spouse’s account and if you or your spouse own another Chase credit card that earns Ultimate Rewards, you can share your points from all of your Freedom, Ink, and Sapphire accounts and save a few card applications too.
Discounted Access to Premium Travel Benefits
Another time it pays to remain an authorized user is for premium travel cards. Take the Amex Platinum for instance.
The first three authorized user cards cost $175 each. While you won’t get you won’t get the $400 in air travel and Uber credits, you will still enjoy these benefits:
- Access to the Global Lounge Collection (The Centurion Network, Delta SkyClub, Priority Pass Select)
- Global Entry or TSA Precheck application fee reimbursement
- Complimentary Hilton Honors Gold and Starwood Preferred Guest status
- Boingo wifi hotspot access
- 5x points on airfare purchases
Earn a Sign-Up Bonus a Second Time
Certain credit card companies including American Express only let you earn a sign-up bonus offer once for a credit card. It doesn’t matter if you cancel and reapply in five years, you’ll never get that bonus again.
One way to bypass this restriction is to be added as an authorized user. While the primary cardholder will receive all the points, you can still benefit from the bonus if you can travel with them. Because some bonuses can require $4,000 or more in total card purchases in the first 3 months to qualify, this can be better than applying for an entirely different credit card where you can’t pool your points together to earn a high-value bonus, but more often than not it’s more rewarding to apply for a different credit card if you’re able to.
Access to Additional Credit
Finally, being an authorized user gives you access to additional credit without a hard inquiry on your credit report. Additional credit is most beneficial when you are attached to your spouse’s account as you can grow your credit together to qualify for better cards in the future.
If you need to make a large purchase, you can on the card and the primary cardholder earns the points for sharing the credit limit with you. Depending on your current credit score, you might not qualify for a card balance high enough to afford a large purchase without penalizing your credit score.
Summary on Authorized Users and Credit Cards
Being an authorized user only harms your credit card approval chances when you want to apply for certain Chase credit cards or the primary cardholder doesn’t pay the bill on-time. Other than that, being added as a user can be a good option, especially when you get an additional bonus like on the Chase Sapphire Preferred.
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