What an Authorized User Fee Is on Credit Accounts
Short answer
An authorized user fee is a charge some credit card issuers apply when you add someone as an authorized user on your credit account. This fee covers the additional cardholder’s use of the credit line and any services tied to that status. It varies by issuer and is separate from any purchases the authorized user makes.
What is an authorized user fee on a credit card?
An authorized user fee is a cost charged by some credit card companies when a primary cardholder adds another person—called an authorized user—to their account. This person receives a card linked to the same account but is not legally responsible for paying the bill. The fee is typically a fixed monthly or annual charge meant to cover the issuer’s expenses related to managing additional cardholders. Not all credit cards charge this fee; it depends on the issuer’s policies and the type of card. For example, some premium credit cards with multiple authorized user benefits may charge a higher fee, while basic cards may waive it altogether.
This fee does not cover the authorized user’s spending or balance—those charges remain the responsibility of the primary cardholder. The authorized user fee simply allows the extra cardholder to have access to the account and benefits, such as rewards or credit building.
How does an authorized user fee work? (with example)
When a primary cardholder adds an authorized user, the credit card company may add a fee to the monthly or annual statement. Here is a hypothetical example:
A person has a credit card with a $95 annual fee. They want to add their spouse as an authorized user. The card issuer charges an additional $35 per authorized user annually. That means the total fees for the cardholder in the first year would be $130 ($95 + $35). The authorized user gets a card linked to the account and can make purchases, but the primary cardholder remains responsible for payments.
If the cardholder adds two authorized users, the total annual fee would be $165 ($95 + $35 + $35). Some cards allow multiple authorized users with no fee or a lower fee per user. Always check the card’s terms before adding authorized users.
Why does the authorized user fee matter to you?
Knowing about authorized user fees matters because adding someone to your credit card can be a useful financial tool—especially for family members needing credit experience—but it may come at a cost. These fees can increase your overall credit card expenses, which affects your budget. If you are considering adding someone as an authorized user to help them build credit or share benefits, you should factor in any fees and decide if the benefits outweigh the costs.
For authorized users, understanding this fee helps clarify that they generally don’t pay this fee themselves; it’s the primary cardholder’s responsibility. It also helps you recognize that adding authorized users is not always free or without conditions.
What related terms do people often confuse with authorized user fees?
Many people mix up authorized user fees with other credit card-related charges. Key terms to understand include:
- Annual fee: A yearly charge for having the credit card itself, unrelated to authorized users.
- Overlimit fee: A penalty for exceeding the credit limit, unrelated to authorized users.
- Balance transfer fee: A charge for moving balances from one card to another.
- Authorized user: A person permitted to use the credit card but not legally responsible for the debt.
- Joint account holder: A co-owner of the credit card account who shares legal responsibility for payments, different from an authorized user.
Authorized user fees specifically relate to the cost of adding extra users, distinct from these other fees.
How can adding an authorized user affect your credit?
Adding an authorized user often helps that person build or improve their credit history because the account’s payment history and credit utilization can appear on their credit report. This can be beneficial for young adults or those with limited credit.
However, if the primary cardholder misses payments or carries high balances, it can harm the authorized user's credit. Understanding the fee and the credit implications ensures both parties know the responsibilities and benefits before adding users.
What should you do before agreeing to pay or charge an authorized user fee?
Before adding an authorized user and agreeing to any fees, follow these steps:
- Review your credit card’s terms: Check if authorized user fees apply and how much they are.
- Calculate total costs: Add any annual or monthly fees for authorized users to your budget.
- Discuss expectations: Clarify with the authorized user how the card will be used and who pays for purchases.
- Consider alternatives: Sometimes, it may be better to get a separate card or a secured card for the authorized user.
- Monitor the account: Keep an eye on spending, payments, and credit reporting.
Taking these steps helps avoid surprises and ensures the arrangement benefits everyone involved.
What actions can you take if you want to avoid authorized user fees?
If authorized user fees seem too costly or unnecessary, consider these options:
- Choose credit cards that do not charge authorized user fees; many issuers offer fee-free authorized user additions.
- Limit the number of authorized users on your account to reduce or avoid fees.
- Use other methods to help someone build credit, such as co-signing a loan or encouraging them to apply for their own card.
- Contact your credit card issuer to ask about fee waivers or discounts, especially if you have a long-standing relationship or good payment history.
Understanding your options can save money and help you decide the best way to share credit access.
Frequently asked questions
Can an authorized user make payments on a credit card account?
Typically, authorized users can make purchases but do not have the ability to make payments or manage the account unless explicitly granted access. Only the primary cardholder can make payments and is legally responsible for the balance.
Does an authorized user fee affect my credit score?
The fee itself does not impact credit scores. However, being an authorized user can affect your credit report positively or negatively depending on the primary cardholder’s payment behavior and account usage.
Are authorized user fees refundable if I remove the user?
Generally, authorized user fees are non-refundable. If you remove an authorized user partway through a billing cycle, the fee for that period usually remains due. Check your card issuer’s terms for specific policies.
How do I find out if my credit card charges an authorized user fee?
Review your credit card’s terms and conditions or contact your card issuer’s customer service. Many credit card websites also list fees for adding authorized users.
Can an authorized user get their own credit card without fees?
Yes, authorized users can apply for their own credit cards, which may have annual fees or not, depending on the card. Having an individual account means they are responsible for payments and credit history.