Authorized User vs. Joint Account Holder: What’s the Difference?

young couple sitting on the floor going over finances

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There are two ways to share a credit card with another person: You can apply with them as a joint account holder or apply on your own and add them as an authorized user.

The primary difference between these two arrangements boils down to who's responsible for paying off the balance. But there are other minor differences between the two that could affect how you decide to proceed.

Authorized User vs. Joint Account Holder
Authorized UserJoint Account Holder
Not responsible for paying billsLiable for making payments
Can build creditCan build credit
Can easily remove yourself from the accountMust close the account to remove yourself
Allowed by most major credit card issuersNot allowed by most major credit card issuers

What Is an Authorized User?

An authorized user is a person who's allowed to make purchases using your credit card. They typically have their own copy of the card in their name that's tied to your account. When it comes to paying the bill, however, the authorized user has no legal responsibility.

Most major credit card issuers allow you to add authorized users to your account, but make sure you understand the authorized-user policy of a credit card before you apply.

If you're just starting out building a credit history or you're trying to rebuild your credit, being an authorized user can help improve your credit score. Once you're added to the account, its entire history will appear on your credit reports if the card issuer reports authorized-user activity.

If the account has been open for a long time and the primary account holder has used it responsibly—including making all payments on time and maintaining a low credit utilization ratio, meaning the balance is low relative to the credit limit—it can benefit you.

That said, if the primary cardholder misses a payment or has a high utilization rate, it could hurt your credit score. The good news is that you can remove yourself as an authorized user from the account at any point. Once that happens, the account is removed from your credit reports, so there's no lingering negative impact.

Credit card issuers don't run a credit check when someone adds you as an authorized user, and it's possible to get added to someone else's credit card account before you turn 18. But with some credit card issuers, the primary account holder may have the ability to limit your spending power. They can also remove you from the credit card account without your permission.

How an Authorized User Affects Your Credit

As the account holder, the process of adding an authorized user to your credit card has no impact on your credit. However, allowing someone else to make purchases on your account can affect you if the authorized user's spending gets out of hand.

If an authorized user racks up a large balance on your account, it could cause your credit utilization rate to grow dangerously high. If that happens, your credit score may drop until you can successfully pay down the balance.

In extreme situations, racking up a lot of debt could also make it difficult for you to make your monthly payments. If you fall behind on payments, a delinquent account or one in collections could take a heavy toll on your credit score.

If you're thinking of adding an authorized user to your account, make arrangements beforehand to ensure you can pay the entire balance each month. If things do get out of hand, remember that you can remove the authorized user from your account if necessary.

What Is a Joint Account Holder?

Unlike an authorized user, a joint account holder is considered a primary borrower on the account. Instead of adding a joint account holder after you apply for a credit card, as you would with an authorized user, you apply with them as a co-borrower or cosigner.

There are some benefits of being a joint account holder instead of an authorized user. For instance, if you want an account of your own but your credit is less than perfect, having a loved one apply with you can improve your chances of getting approved.

That said, most major credit card issuers don't allow joint accounts. Also, changes in the relationship between joint account holders can make things complicated, such as a divorce. You may need to both agree to close the account.

Finally, you typically can't apply for a credit account, even with a co-borrower, unless you're 18 years old.

How a Joint Account Impacts Your Credit

As far as credit is concerned, the main difference between being a joint account holder and an authorized user is that when you apply as a joint account holder, you'll undergo a credit check.

Hard inquiries typically don't have a significant or lasting impact on your credit score, but they do remain on your credit reports for two years.

Also, if things go south, you can't get rid of that negative information from your credit report as you can as an authorized user. The negative items associated with the card will remain on your credit report for seven years, even after closing the card.

Finally, both account holders are equally responsible for any debt incurred using the card. So if you can't make payments, the credit card issuer can go after both of you.

How to Choose the Right Option

There are a few things to consider before applying for a credit card with someone as a joint account holder or adding an authorized user to your account after the fact.

One major consideration is the card itself. Because so few major card issuers allow joint account holders, you may simply not have the option with your card of choice. Also, think about the purpose of the arrangement. For example, opening a joint credit account may make more sense if you're a married couple than if you're trying to help your teenager establish a credit history.

And if you want the flexibility to add and remove someone from your account, an authorized user arrangement would be a better fit.

Monitor Your Transactions and Credit Score

Whether you apply with someone as a joint account holder or add them as an authorized user, keep an eye on your account online and on your monthly statements to ensure you're not spending more than you can pay off at the end of the month.

It's also important to check your credit score regularly to keep track of how the account affects it. If you rack up a high balance one month, for instance, a lower credit score could be an indicator that you need to make some adjustments or add limits to card usage.