Know the difference between authorized and joint users
For those of us that have just established our credit or if we have a family member that was approved for an exclusive store card, we might be an authorized user or a joint user on our parents or spouses credit cards. While the two terms sound similar, legally, they can make a world of difference if the main card holder should pass away. Let’s take a look at the difference between joint and authorized users.
If you are an authorized user on another persons’ credit card, regardless of who it is, you probably have your own card with your name on it. You can use the card like it was your own and your credit report is affected by how the card is used and if payments are made on the account on time. You are, however, protected if the main user of the card should pass away. No matter what a debt collector might say, you are not legally obligated to pay down the balance of the card if the primary card holder cannot. What you do need to do, however, is make sure that the balance is taken care of as soon as possible. You are not legally mandated to pay the balance, but since the primary card holder has passed away, it is your credit that is taking a beating because the card isn’t getting paid. The best advice is to seek legal help in finding out how to discharge the balance on the card as soon as possible and rescue your credit score ASAP.
If you are a joint user on the card, you have the same legal rights and responsibilities to the credit card company as the primary card holder. You are, in essence, a co-primary card holder on that account. If the person who was the other half of the joint card holder passed away, than you are required to pay down the balance, even if you hardly used the card. Your credit score will also be affected by any non-payment on the account, but unlike the authorized user, the responsibility to pay down the balance is all yours.
So, when should you have an authorized user and when should you choose a joint user? The circumstances vary depending on the situation. If you are trying to help build your child’s credit by allowing them to use your credit card, it is best to go with an authorized user, only. This way, you are still in control of the account and you can cut them off if need be. It also protects them in case of an emergency or your untimely death. If you have a spouse, however, and you were just approved for a credit card, it might be a good idea to have them as a joint user. In this scenario, if you should pass away, your spouse would be liable to pay off the balance, but they wouldn’t lose the use of the card, and if you are managing your money correctly, you don’t have a wallet full of credit cards. You don’t want to lose a possible wage earner and your best credit card in one fell swoop. Knowing the difference between joint and authorized users can make a huge difference when it comes to paying your bills and keeping your credit report pristine.