Difference between an authorized user and joint account holder

Quick insights

• While authorized users and joint account holders both have access to the benefits and purchase ability of a credit card, there are several key differences between them.
• One of the main differences between authorized user and joint account holder status is that account holders are financially responsible for charges made on the account, while authorized users are not.
• Both statuses come with their own pros and cons, and it can be helpful to understand them both fully before deciding if one might be a good fit for you.

What is an authorized user?

An authorized user is a person who has been added to a credit card account. This person is not an account holder, and is therefore not responsible for payments; they are issued their own card and can make purchases and start building a credit history and credit score. That said, if the account holder does not have a good payment history, this could negatively impact the authorized user’s credit score and history.

What is a joint account holder?

Joint account holders are individuals that share a credit card account. Since there is no primary account holder on the account, they are each responsible for making payments, and any account activity impacts each of their credit scores and credit histories. Further, both cardmembers are usually required to close the account if one of them ever wants to cancel their card. While this arrangement might work for you, please be aware that relatively few credit card issuers allow joint account holders on credit cards.

Choosing the right option

While both options offer the opportunity to share a credit card with a partner or family member, there are unique pros and cons to both options:

Authorized user on a credit card

There are several benefits to being an authorized user on a credit card:

• Credit history: Being an authorized user allows you to build your credit history – ideally in a positive way – without needing to be approved or bear financial responsibility for your own credit card. Even if you don't make many purchases on the card yourself, you can essentially piggyback off the transactions and payment history of the primary account holder.
• Card benefits and approval: As an authorized user you can usually gain access to the benefits of the credit card, even if you would not otherwise have had the credit score or history to be approved. Purchases made on an authorized user’s card can also earn rewards points at the same rate as the primary account holder. That said, the authorized user typically lacks access to use earned rewards or points without the primary account holder’s involvement.
• No obligation: As an authorized user you have no financial obligation to repay the debts you accrue on the card.
• Availability: Many lenders offer the authorized user option on their cards.

All of that said, there are some potential drawbacks to being an authorized user as well:

• Limited control: The primary accountholder ultimately has the ability to add or remove authorized users, so you would have no way of preventing your removal from the account.
• Shared history: The fact that the primary accountholder’s payment history and account usage is reflected in the authorized user’s credit score can be a double-edged sword; if the accountholder misses one or more payments, carries a credit utilization ratio above 30% on the card, or otherwise engages in poor financial decisions, the authorized user’s credit score could suffer.

Joint account holder on a credit card

Becoming a joint account holder comes with its own share of unique benefits and drawbacks:

• Build credit: Like authorized users, joint account holders can build credit through the usage of the account, whether or not they themselves are doing the spending.
• Responsibility: Unlike an authorized user, both joint account holders are financially responsible for the account, for better and for worse.
• Adding and removing: As a joint account holder, you are approved at the same time as the other account holder, and in many cases neither party can be removed for any reason without closing the entire account.
• Simplified finances: Joint account holders typically live together and share some, if not all major expenses, so a single account for both users could help simplify the paying of joint expenses.
• Availability: Many lenders don’t offer joint account holders on their credit cards, so it is not as widely available as an authorized user card.
• Benefits and rewards: One advantage of being a joint account holder is that both parties typically receive the benefits and rewards of the credit card, including travel benefits, purchase protection and more.

Bottom line

Joint account holders and authorized users share some similarities, such as the chance to build credit history and credit score, the opportunity to add more rewards points and more. But there are several key differences between the two, including the financial responsibility for the debt accrued and both the ease and timing of adding or removing the additional user. Joint accounts are also much rarer, as many lenders do not offer this option. All these factors should be considered to make the best choice for you.