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Adding authorized users to credit cards has many advantages. You can hit the minimum spends faster, earn more rewards through additional spending, plus some cards even offer a bonus for adding them. The Chase Sapphire Preferred offered a 5,000 point bonus when you added an authorized user. But that benefit was just eliminated. Here are the pros and cons of this change.
Chase Sapphire Preferred benefits
The Chase Sapphire Preferred is a valuable credit card that earns Chase Ultimate Rewards, some of the most valuable points in the travel world. With these points, you have the option to purchase travel, transfer to partners, or redeem for cash.
Cardholders who are looking for maximum value will transfer to one of the nine airline partners or three hotel partners. For domestic travel, I like using the points to purchase airfare at 1.25 cents value per point.
The Chase Sapphire Preferred offers a 50,000 point sign-up bonus after spending $4,000 within 3 months of opening the card. When redeeming cash for travel, that sign-up bonus is worth $625. The credit card earns 2x points on travel and dining plus 1x points on everything else.
There are no foreign transaction fees plus the card offers primary rental car insurance, making it is an excellent travel companion. There is a $95 annual fee that is waived the first year.
Chase Sapphire Preferred eliminates 5,000 authorized user bonus
In addition to all of the perks mentioned above, there was no charge to add an authorized user to the Chase Sapphire Preferred card. Chase used to offer a 5,000 bonus for adding authorized users, giving cardholders a free opportunity to earn additional points at no cost.
However, Chase recently eliminated the 5,000 authorized user bonus. To put that in context, those 5,000 points are worth $62 in travel through the Chase portal or a $70 flight when transferring to Southwest.
The loss of this benefit should not be a deterrent from signing up for the Chase Sapphire Preferred, but it does sting a little.
Chase actions cardholders need to know
Chase is already notorious for their “5/24 Rule” which limits approvals if you’ve had more than five new credit cards in the last 24 months. Chase tightened the rule even further when they restricted the Chase Sapphire Preferred and Chase Sapphire Reserve to once every 48 months.
In June, Chase announced the elimination of Price Protection and Return Protection on the Chase Sapphire Preferred, Chase Sapphire Reserve, and Chase Ink Business Preferred effective August 28. This benefit is not widely used, but it can be possibly more valuable than a sign-up bonus.
The Chase Sapphire Reserve benefits were downgraded as well. Priority Pass lounge access was limited to two guests. Additionally, cardholders stopped earning points when redeeming their $300 travel credits.
What other credit cards offer an authorized user bonus?
Authorized user bonuses come and go, but this current bonus is worth mentioning:
- Bank of America Virgin Atlantic World Elite Mastercard offers 2,500 bonus miles for each authorized user that you add to your account, for a maximum of 5,000 additional miles.
If you are looking for additional miles and points, contact your current credit cards and ask them if there are any offers for adding an authorized user.
Why you want to add an authorized user
There are many reasons why you would want to add an authorized user to your credit card account. Here are some of the best reasons to add an authorized user.
Card benefits without a credit inquiry
When you add an authorized user, they are not an account owner. Therefore, when they are added, there is no credit inquiry. This is especially valuable to people who have poor credit and may not get approved on their own. Or, if they’re ready to apply for a mortgage or auto loan, you want to avoid any changes to your credit history.
For most credit cards, the authorized users get the same (or similar) perks as the actual cardholder. For example, the Citi AAdvantage Executive World Elite Mastercard card offers up to 10 authorized users at no charge. Each authorized user can access the American Airlines Admirals Club for free just as the cardholder can.
Doesn’t stop you from getting a bonus in the future
When a person is added as an authorized user, the good thing is that they can still apply for the card in the future to receive the sign-up bonus. Being an authorized user is a way to have your cake and eat it too.
Why adding an authorized user is a bad thing
Adding authorized users to credit cards isn’t always a good thing. There’s a potential negative side as well.
Counts towards 5/24
One of the biggest issues I have with the Chase 5/24 Rule is that becoming an authorized user counts against your total just the same as if you applied for a new credit card.
Although I don’t like it, I understand why. Authorized user and cardholder accounts report the same on a credit report, so it is nearly impossible to tell them apart. Chase took the cautious approach and treated both the same.
Access to your credit line
You are responsible for any and all charges that an authorized user makes on your account. Many consumer credit cards do not offer the ability to have separate card numbers for authorized users. This makes it difficult to track who spent what.
Be careful who you add as an authorized user. You could be footing the bill for their spending.
Can impact their score
Most people approach adding authorized users as a good thing. After all, one tactic to giving people without a credit history a boost to their score is to add them as an authorized user.
That’s great when things work out. However, the authorized user’s credit can be negatively affected as well. If the cardholder misses a payment, has a high utilization, or defaults on the debt, all authorized users of the credit card will feel it in their score.
Should this stop you from getting the Preferred card?
Although nobody likes to lose out on some quick and easy Chase Ultimate Rewards points, if you have the Preferred or were planning to apply, this shouldn’t be a deal killer. The Chase Sapphire Preferred® Card offers plenty of great perks that make it a good card to keep in your wallet.
Personally, I think the Chase Sapphire Reserve is a better deal if you travel at least twice a year. Continue reading to see why.
Chase Sapphire Preferred vs. Chase Sapphire Reserve
The Chase Sapphire Reserve® is the premium version of the Chase Sapphire Preferred. It has the same 50,000 bonus offer, plus it offers better perks than the Preferred card.
Travel and dining earn 3x points instead of 2x (a 50% increase). Points can be redeemed for 1.5 cents instead of 1.25.
A Priority Pass Select membership is included, so you can visit over 1200 airport lounges worldwide. You will also receive up to $100 in reimbursement for a Global Entry or TSA PreCheck application once every 4 years.
There is a $450 annual fee, which isn’t waived the first year. However, this fee is offset by the $300 travel credits each year. This reduces the net cost of the Reserve to $150, which is only $55 more than the Chase Sapphire Preferred. Find the card that works best for you and start spending.
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Editorial Note: The editorial content on this page is not provided by any bank, credit card issuer, airlines or hotel chain, and has not been reviewed, approved or otherwise endorsed by any of these entities.