Most newlyweds have financial accounts from before they got married. For example, one spouse may have a credit card that they opened when they were single. They essentially bringing it into the marriage with them. But getting married doesn’t automatically mean your spouse can use that account.
If you don’t add them to the account or make them an authorized user. They technically aren’t allowed to use that card. However, it’s important to understand that adding a new authorized user does come with some risks. Here’s a look at what it means to give your spouse credit card authorization as well as alternative options that may suit your needs.
Adding a Spouse as an Authorized User
In most cases, the process of adding a spouse as an authorized user is very simple. You’ll need to contact your credit card issuer and give them your spouse’s information. They will need name, birth date, and Social Security number. Then request that they be added.
When you list your spouse as an authorized user, you may have two options for how that will work. First, you might be able to get your spouse their own credit card that attaches to that account. Second, you may only be giving them the legal right to use your card. This way they won’t have one of their own.
The Benefits of Adding a Spouse as an Authorized User
Whether your spouse gets their own card or simply has the ability to use yours, your spouse can then make charges to that account legally. They may also get access to your account records and various associated services, like the online portal, roadside assistance, or any other perks given to cardholders.
However, how much access they get varies from one issuer to the next. Some are more restrictive while others are less so, so you’ll want to see what is available to your spouse before you complete the process.
Additionally, that credit card could start appearing on your spouse’s credit report once the addition is fully recorded. If your spouse has little or poor credit and the card is in good standing with a low balance, their score may improve.
It’s important to note that not all banks report authorized users to the credit bureaus, so it is also possible that the account won’t show up. In that case, your spouse’s credit score remains unchanged.
With an authorized user, you might rack up rewards more quickly. Since you are both using the card, you might have more transactions.
Plus, if this is the only credit card you and your spouse have, you are centralizing all of your credit card activity. This may be preferable to having separate accounts as it makes budgeting and tracking simpler.
The Drawbacks of Giving Your Spouse Credit Card Authorization
The biggest drawback of having anyone as an authorized user, including your spouse, is that you are still solely responsible for paying the bill. It doesn’t matter who made the charges; the repayment obligation only falls on the shoulders of the primary account holder in this scenario.
This means, if your spouse spends hundreds or thousands of dollars, they technically aren’t legally responsible for paying it back to the card issuer. That makes adding them as an authorized user a bit of a financial risk, as you are assuming full responsibility for their activity.
However, that doesn’t mean your spouse isn’t taking on some level of risk as well. For example, if your card is maxed out or isn’t in great standing, it could harm your spouse’s credit score. Plus, if you miss a payment, their score can be penalized for that as well, even if they aren’t technically responsible for paying.
Alternatives to Listing a Spouse as an Authorized User
If you want to centralize your credit card activities, there are options beyond listing a spouse as an authorized user. You might be able to open a joint account instead.
With a joint account, you are both legally responsible for repaying the debt. Additionally, you both have the same rights to the account, such as access to records and various services. However, you can’t simply turn your existing credit card into a joint account. Instead, you’ll have to get a new one.
Opening a joint account is a bit more complicated than adding someone as an authorized user. First, the card issuer will examine you and your spouse’s credit history and score to determine if you are eligible for a new account. If your spouse’s credit is poor, you might get denied, or you could end up with an interest rate that is far above what you have on your existing account.
Additionally, new accounts impact your credit scores. You’ll both have a new hard inquiry on your reports, and the average age of your accounts will go down. It may increase your total available credit if you keep your other account open, or decrease it if you close your old account and your new limit is lower. Plus, if you close your current account, you’re impacting the average age of your accounts even more, and that will alter your score.
Ultimately, either approach can be viable. Plus, you always have the ability to keep the credit card in just your name, leaving the existing paradigm intact. Just make sure you understand the risks and benefits of each option, and choose the one that best meets your needs and preferences.
Have you given your spouse credit card authorization? Why or why not? Share your thoughts in the comments below.