Credit cards are an essential tool for many Australians when it comes to managing their personal finances. But adding an additional cardholder is fraught with pitfalls — and benefits.
On the one hand, adding someone to your account can give them access to the credit limit and make it easier to rack up more reward points. But on the other hand, it could lead to overspending and even damage the primary cardholder's credit score if they don't manage their payments responsibly.
So, how do additional credit cardholders work, and what do you need to know before adding someone to your account? Before adding anyone to your account, find out what the ins and outs are, including the benefits, risks, and best practices.
Did you know adding another cardholder doesn't have to mean paying another annual fee? Compare credit cards with free additional cardholders.
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Key takeaways
- The primary cardholder is responsible for any charges made by additional cardholders.
- Adding an additional cardholder can benefit couples or families, as it allows for shared expenses.
- The person you're adding as an additional cardholder must be trustworthy and financially responsible.
- Secondary credit cards work similarly to primary credit cards, allowing multiple cardholders to access the same credit account.
- The main account holder bears all the risk, so there must be clear spending limits and payment responsibilities.
- Additional credit cards are different to joint credit cards where both cardholders share the risk and reward.
How to add an additional cardholder
Many — but not all — credit cards allow the primary cardholder to add one or more additional cardholders to their account.
The process varies between banks, but generally works the same way. You can apply to add an additional cardholder online or by calling customer services. You may have to provide identification for the additional cardholder. A credit check is not required to add an additional cardholder because the primary cardholder carries the risk.
Generally, the process is as follows.
- Apply to add an additional cardholder via online banking or telephone banking, or in a local branch.
- Provide the details of the secondary cardholder, including their name and address.
- Decide on a credit limit for the secondary cardholder.
- Once approved, a new additional card will be issued.
- Give the card to the additional cardholder and activate it (so it can be used).
- Begin using it.
How much does it cost to add an additional cardholder?
The cost to add an additional cardholder varies depending on the credit card issuer and the specific credit card product. Here are some general guidelines.
- Free. Many credit cards, especially basic or no-frills cards with no annual fee, often allow you to add an additional cardholder at no extra cost. However, the number of additional cardholders that can be added may be on the low end.
- Fee per additional card. If there is a fee to add an additional cardholder, it generally ranges anywhere from $10 to $100 or more. Note that this is per card added, so it can add up.
- Varies by tier. For example, a black card is likely to charge a higher additional cardholder fee compared to a gold or standard card.
How to manage additional cardholders
If you add another cardholder, set clear guidelines and make them clear. This is especially important if you have multiple additional cardholders.
For example, you may want to set spending limits (if possible). Before allowing the secondary cardholder to start spending on the credit card, you must discuss payment responsibilities and ensure that they know the terms and conditions of the account.
- Establish clear spending limits. Before adding an additional cardholder, set a clear spending limit. This will help prevent overspending and ensure you can pay the bill on time.
- Discuss payment responsibilities. Discuss who is responsible for paying the credit card bill each month. This will prevent confusion and ensure the bill is paid on time.
- Regularly review account activity: Ensure the additional cardholder uses the card responsibly. Review the account to catch potential problems early and avoid negative credit score effects (which will impact you and not the additional cardholder).
- Set up alerts. Set alerts warning of card use, payment due dates, and balance limits. Alerts will help to keep the account in good standing and avoid surprises.
- Have a clear rewards plan. Discuss the use and division of credit card rewards between cardholders to prevent confusion or disagreements from arising later. Note that most personal credit cards do not reward the additional cardholder, with any points earned being credited to the main cardholder's account.
- Keep an open line of communication. Communication is essential to keep everyone on the same page and avoid costly arguments.
Pros and cons
Pros
- No need to pay two annual fees. Using one primary card with a secondary cardholder can save money on fees.
- Keeping better track of household expenses. Having one credit card for the household can make it easier to manage expenses and the budget.
- Sharing reward points. As long as the primary cardholder shares the rewards equally, secondary cardholders can help earn more reward points.
Cons
- Some cards charge a fee per additional card, although it's usually less than the annual fee if there is one.
- Over-spending. Secondary cardholders may spend recklessly, leading to large credit card balances and debts for the primary cardholder.
- Late payments. Missed payments are recorded on the primary cardholder's credit score, not the secondary cardholder's.
- Negative impact on credit score. If the primary cardholder can't pay an overspent credit card, they may face a deteriorating credit score.
FAQs
Is there a minimum age for additional cardholders?
Yes. Most card providers require supplementary cardholders to be at least 16 years old.
Do secondary cardholders build credit?
No, additional cardholders do not build credit.
Is there a new credit check on the secondary cardholder?
No. The primary account holder is the one responsible for the debt. As a result, credit checks are typically not performed on the secondary cardholder.
Does adding an additional cardholder affect the primary cardholder's credit?
Yes, adding an additional cardholder can affect the primary cardholder's credit, especially if the secondary cardholder overspends or if the primary cardholder is unable to make timely repayments.
Will the additional cardholder earn reward points?
Not directly. Spend through the additional cardholder's card will typically be credited to the main cardholder, whose responsibility it is to distribute points to the additional cardholder via the rewards program's family sharing or pooling function.
Do additional cardholders get lounge access?
It depends on the terms and conditions of the credit card issuer. Some issuers may offer lounge access to secondary cardholders, while others may not. Check with the issuer, but typically credit card lounge access comes in the form of passes issued to the primary cardholder (one of which could be given to the secondary cardholder).
Can an additional cardholder be removed?
Yes. The primary cardholder can remove the secondary cardholder by contacting the credit card issuer. This can be done without the consent of the secondary cardholder.
How many additional cardholders can I have?
The number of additional cardholders permitted varies widely between cards. For most personal cards, it's fewer than 10. However, some business credit cards allow 99+ additional cardholders to be added to the account.
Do additional cardholders get a separate statement?
Banks typically generate separate statements for each additional card on an account. However, it's generally the case that statements are delivered to the primary account holder.
Is an additional cardholder the same as a joint credit card?
No, an additional cardholder is different from a joint credit card. Joint credit cardholders share the risk and responsibility, while secondary cardholders do not.
Will the supplementary card have the same number as the primary card?
No. Each card on the account has a different credit card number. This helps to identify who made each transaction on the account.
Is it worth adding additional cardholders?
Sharing a credit card account can benefit families who trust each other. It allows for an integrated spending plan and can help you earn more rewards points.
If the cost to add another cardholder is high and your combined spending is relatively low, the benefits may not justify the cost. Weigh this up when deciding if it's worth paying for.
Regardless, if you have any doubts about the financial responsibility of the person who wants to share your account, don't add the secondary card. As the primary cardholder, you carry the risk and responsibility for all amounts spent on your account.
