The Fine Print of Authorized User vs Joint Credit Card Holders: Understanding the Difference
When it comes to credit cards, managing multiple accounts can be overwhelming, especially for those without a strong financial history or who are not familiar with credit card terminology. Two common scenarios that can cause confusion are having an authorized user on your credit card account and being co-signed by a joint holder.
In this article, we will delve into the differences between Authorized User vs Joint Credit Card Holders, highlighting specific financial details, real examples, APR figures, and actionable advice to help you make informed decisions about your credit cards.
Authorized User
An authorized user is someone else who has been added as an additional cardholder on a credit card account. They are not responsible for paying the balance, but they can contribute to the payment obligations of the primary account holder. Here’s how it works:
The primary account holder pays their regular credit card bill.
If there is a late fee or penalty charge, authorized users may be held accountable.
No credit is reported on your report when an authorized user has a positive payment history.
Real example: John has a good credit score and earns a steady income. His sister Emily becomes his authorized user on his Visa credit card. She reports all payments on time, and the credit card issuer does not report her account to the credit bureaus.
Joint Credit Card Holder
A joint credit card holder is someone who co-signs for another person’s credit card account, with both parties agreeing to be responsible for the debt in case one party defaults. Here are the key differences:
Both parties are jointly and severally liable for the debt, meaning each party can be held accountable.
One party may receive a reduction or forgiveness of their share of the debt if the other party makes payments.
Real example: Mark is married to Jane, and they both co-signed on her credit card account. If Jane defaults on her payments, Mark will be responsible for paying back the entire amount, including interest and fees.
APR Figures
Here are some APR figures to consider:
Authorized User:
+ Average APR: 12-18%
+ Late fee charges: 5-0 per late payment
+ Credit score impact: Minimal
* Joint Credit Card Holder:
+ Average APR: 14.9% – 20.4%
+ Late fee charges: 0-0 per late payment
+ Credit score impact: Higher
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