Family Credit Card Strategy: Add Authorized User Or Apply Outright?

Family Credit Card Strategy: Add Authorized User Or Apply Outright?

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We all have different credit card strategies, which are impacted by what kind of rewards we’re looking for, what categories we spend most in, etc. One question I often get from readers who share finances with others (family members, spouses, etc.) is whether it makes sense to add family members as authorized users to a card you already have, or to have them apply for a card outright, so they’re also a primary cardmember.

I wanted to give examples of some cards where it makes sense to add people as an authorized user, and also examples of cards where it makes sense to have as many primary cardmembers as possible. I’ll be taking the welcome bonuses out of the equation at first. However, this should be a major consideration, so I’ll cover that a bit later on.

Cards where you’re better off adding authorized users

There are some cards where it makes more sense to add authorized users, rather than having two or more people hold onto the cards as primary cardmembers. These are generally cards that offer strong perks for authorized users at a reasonable (or no) annual fee, as well as cards with annual fees that offer a great return on spending for authorized users, so that you can maximize your points.

Here are six cards where it can make a lot of sense to add authorized users, in my opinion:

The Citi Executive AAdvantage Card offers a great Admirals Club perk for authorized users

Cards where you’re better off applying outright

There are also some cards where it makes sense to apply outright as a primary cardmember, rather than adding a family member as an authorized user. These are generally cards where the ongoing perks for primary cardmembers more than justify the annual fee, not even factoring in any return on spending. This also includes no annual fee cards that offer a generous return on spending, but with a cap.

Here are five cards where it can make a lot of sense to apply outright as a primary cardmember, even if a family member already has the card:

  • The IHG® Rewards Premier Credit Card (review) has a $99 annual fee, and offers an anniversary free night certificate on your account anniversary every year, valid at a property costing up to 40,000 points (though you can use points to top off for a more expensive redemption). That alone should more than justify the annual fee. However, the card has lots of other great perks, from IHG One Rewards Platinum status, to a fourth night free on award redemptions, and more. The more people in your family that have this card, the better.
  • The World of Hyatt Credit Card (review) has a $95 annual fee and offers an annual free night award valid at any Category 1-4 Hyatt property, which includes some great hotels that retail for way more than $95 per night. The more primary cardmembers you have, the more free nights you can get every year.
  • The Alaska Airlines Visa® Business card (review) has an annual fee as low as $75 ($50 for the company and $25 per card) and offers an Alaska companion fare on your account anniversary every year, starting at just $121 ($99 base fare plus taxes & fees starting at $22). If you fly Alaska with any frequency, then there’s value in having as many of these as possible, especially given how few restrictions are associates with the vouchers.
  • The Chase Freedom FlexSM (review) has no annual fee and offers 5x points in rotating quarterly categories, which is a great way to boost your Ultimate Rewards points balance. The catch is that you only earn 5x points on the first $1,500 spent each quarter, so if you’re someone who would spend more than that in those categories, it could make sense to have multiple people pick up the card to maximize value.
  • The Blue Business® Plus Credit Card from American Express (review) has no annual fee (Rates & Fees) and offers 2x Membership Rewards points on the first $50,000 spent across all categories each calendar year (after that 1x). This is a bit different than the above family scenario since this is a business card, but if you’re in a position where you have more than $50,000 per year of spending, it could make sense for multiple people to pick up this card to maximize the Amex Membership Rewards points you can earn.
Just about everyone should get value from the IHG Premier Card

How do welcome offers factor into all of this?

Credit card issuers offer huge welcome bonuses on many cards, which can in some cases be worth $1,000+. You only get these bonuses when you apply for a card outright, and not when you’re added as an authorized user.

Above I’ve tried to look at the big picture, and whether you’re better off applying for a card outright or being added as an authorized user in the long run. In the short term it’s a totally different story, since the math almost always works out better when applying for a card directly, given the bonus.

Everyone will take a different approach in this regard, and to how they want to factor the welcome bonus into their decision making process. I will say that these kinds of bonuses often cause my household to have multiple people as primary cardmembers, rather than authorized users.

Welcome offers alone can get you some awesome travel adventures

Bottom line

There’s no perfect credit card strategy, though there is an important distinction to be made between adding someone as an authorized user and having them apply for a card outright in order to be a primary cardmember.

Generally speaking, I’d say it’s worth adding someone as an authorized user on a card with strong authorized user perks at a reasonable or no cost, as well as on cards with annual fees that offer a good return on spending for authorized users. Meanwhile I think it’s worth applying for a card outright when the benefits of holding onto a card outweigh the annual fee, even not factoring in spending.

I’m curious to hear from OMAAT readers — what’s your family’s strategy with deciding whether to add an authorized user or apply for a card outright?

The following links will direct you to the rates and fees for mentioned American Express Cards. These include: American Express® Gold Card (Rates & Fees), The Blue Business® Plus Credit Card from American Express (Rates & Fees), and The Platinum Card® from American Express (Rates & Fees).

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  1. iamhere Guest

    Big question is - Are the benefits enough to be worth paying another annual fee? If there are not enough benefits for the person to have their own card, then you might as well add them to yours so you can accumulate the rewards in one account. With some airline or hotel cards it may be worth getting a separate account if there is a need to build their status (more so for hotels), for example.

  2. JB Guest

    It could also make sense to apply first as a primary card member so you get the welcome bonus and then cancel it and become an Authorized User. That way you can get the welcome bonus if its high (ex: the Amex Platinum at 100K), even if you don't have the need to be a Primary Holder (and you can still apply for the card again, just without the welcome bonus).

  3. Jordy Guest

    We have a Citi American Airlines AAdvantage Platinum Select with me as the primary cardholder and my wife as an authorized user. One thing we found is that if she is traveling alone, she did not qualify for the free checked bag as it is only for the primary cardholder plus additional people traveling on the same itinerary.

    Has anyone else had this issue or found a way around it?

    1. billnyenotascienceguy Guest

      @Jordy It's best to open an account in your wife's name and add yourself as an authorized user on her card. Take advantage of the welcome bonus miles now she will have the free bags for herself and up to 4 companions, so between the both of you you can get free bags for up to 8 people on the same reservation. Choose one of you to concentrate your status with American because now your companion will be upgraded as well. Hope this helps.

  4. Burt Guest

    Not sure if it was addressed, but the chase 5/24 limit is also something to be aware of when you add authorized users to personal cards because they count as part of the limt. One trick to get around this is instead of getting an authroized user card, just add the card to a person's apple wallet, and then they can use your card.

  5. Never In Doubt Guest

    While the intent of this article is slightly different, I’ve made the young Doubts authorized users on all the family cards. (Amex Plat is the only one that charges extra).

    They’re welcome to any credit history benefit that gets them.

    1. Dr. McFrugal Guest

      Is there an age limit for added authorized users? Can I add on my new born baby as one?

    2. Never In Doubt Guest

      I believe the Amex Platinum AU age minimum was 13.

      None of the other cards we have asked for birthdates/ages, so to answer your question, yes for many.

  6. Matt Guest

    The Platinum Card is a card that I've been waffling on as my wife and I merge our finances on. I think we should just get a second card outright rather than adding an authorized user, there are just too many statement credits (Uber, Saks, Airline, digital, etc) she'd be missing out on if we just add her as an authorized user to my card -- and those credits alone will offset the additional $525...

    The Platinum Card is a card that I've been waffling on as my wife and I merge our finances on. I think we should just get a second card outright rather than adding an authorized user, there are just too many statement credits (Uber, Saks, Airline, digital, etc) she'd be missing out on if we just add her as an authorized user to my card -- and those credits alone will offset the additional $525 it would cost over the authorized user fee for one additional card.

    An interesting addition to this post, Ben, that I'd love to see is: are you going to add Miles (your new son, congrats again!) as an authorized user to any of your cards just for the sake of building his credit history -- and which cards you're going to do it on?

    1. Never In Doubt Guest

      Authorized user charges take advantage of all the Amex Plat credits.

      Unless you’re going crazy with those credits, just make her an AU.

  7. DLPTATL Diamond

    The only time I'm on the fence about adding an authorized user on a "sock drawer" card is when they're offering something like 5-10,000 points to add an authorized user and make a purchase or in some cases spend $100-1,000.

    1. 305 Guest

      Amex had a decent bonus the last few months: 20k MR when authorized user spends $2k in 6 months

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305 Guest

Amex had a decent bonus the last few months: 20k MR when authorized user spends $2k in 6 months

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iamhere Guest

Big question is - Are the benefits enough to be worth paying another annual fee? If there are not enough benefits for the person to have their own card, then you might as well add them to yours so you can accumulate the rewards in one account. With some airline or hotel cards it may be worth getting a separate account if there is a need to build their status (more so for hotels), for example.

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Never In Doubt Guest

I believe the Amex Platinum AU age minimum was 13. None of the other cards we have asked for birthdates/ages, so to answer your question, yes for many.

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