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How Do Supplementary Credit Cards Work?

Have you ever wondered how do supplementary credit cards work? Whenever you sign up for a new credit card, you’re always asked if you want to add a supplementary card or an authorized user credit card. Saying yes can be a great way for families to manage their finances, but are there any risks involved to be aware of? Of course, there are, which is why you need to understand how joint credit cards work before you add any users.

How do supplementary credit cards work?

Supplementary cards are pretty straightforward. The primary cardholder can add an authorized user to their account. That user could be a family member, caregiver, or even a friend. Although each additional card will have a unique credit card number, the account is managed by the primary user.

What that means is that when the monthly bill comes, it’s addressed to the primary cardholder. All purchases made by others users will be shown on the statement, but the primary user will be responsible for all the charges. There’s no denying that having authorized users can be handy since the main account holder can monitor purchases, but those extra cards could also be abused.

Generally speaking, you should never add a supplementary user unless they live with you and you trust them. If a friend ever approaches you to add them as an authorized user or to co-sign a card for them because they have bad credit, don’t do it, as you’d have to pay their bills if they don’t.

Supplementary card annual fees

When it comes to the supplementary credit card annual fees, consider it separate from the primary cardholder. If you have one of the best credit cards with no annual fee, you likely won’t have to pay an annual fee when you add a supplementary card.

However, if your credit card does come with an annual fee, then you’ll likely have to pay an annual fee for any supplementary credit cards that you add. The good news is that the annual fee of any supplementary card is usually lower than the fee that the primary cardholder pays, but you also need to consider any promotions available.

For example, the BMO World Elite Mastercard usually has a promo where the annual fee of $150 is waived for the first year. If you add an authorized user credit card, that would cost you an annual fee of $50 since the fee is not waived for the supplementary card.

That said, you don’t always pay a fee for the supplementary credit card. If you look at the Amex joint credit card fee for the American Express Gold Rewards Card, you can add one supplementary card for free which normally costs $50. Better yet, when you using a referral link to apply for the card, you also get an extra 5,000 American Express Membership Rewards points for free when adding a supplementary card.

As you can see, it’s important to know how to do supplementary credit cards work so you don’t get caught paying fees you weren’t expecting.

Supplementary card sign up bonuses

If you decide to add a joint credit card when you sign up for a new credit card, you won’t get double the signup bonus even if you meet the minimum spend requirement with both cards. The good thing about supplementary credit cards is that the spending made on that card counts as overall spending if you’re trying to meet the minimum spend to get your welcome bonus.

Generally speaking, there’s no signup bonus that you would get when you add an authorized user credit card, but as mentioned above, the Amex Gold Rewards Card does give supplementary cardholders a bonus when using a referral link.

That said, some credit card companies have experimented with offering a signup bonus when you add a supplementary card. TD Bank had a promo recently which required you to sign up to get part of your welcome bonus. This was annoying since not everyone needs a joint credit card and there was a fee charged to the joint cardholder’s account. This is pretty annoying so I’m happy they haven’t used that tactic in a while. If they do bring it back, they should add a bonus like American Express.

Earn and redemption rates

When it comes to the earn rate with joint credit cards, it’s exactly the same for both cards. Let’s say you have the Marriott Bonvoy American Express Card. The earn rate is 5 Marriott Bonvoy points for every $1 spent on eligible purchases at participating Marriott Bonvoy properties and 2 points per dollar spent on all other purchases. It doesn’t matter if you’re the primary cardholder or you’re using the authorized user credit card, you both earn the same number of points.

Supplementary cardholders can not make redemptions directly. Since you’re pooling your miles and/or points, everything ends up in the primary cardholder’s account. This isn’t a big deal since the primary cardholder can just make a redemption on behalf of the joint cardholder. However, that could still pose a problem if you’re not travelling with the primary cardholder as your included travel insurance (with the exception of travel medical) wouldn’t be included.

Resource URL:- https://www.moneywehave.com/how-do-supplementary-credit-cards-work/