How mom can share one card with four daughters
By Erica Sandberg
May 3, 2016
What is the best way for five people to share one credit card with a $10,000 credit limit? My mom is really the one asking, and it is her credit card. We are her four daughters ages 17 to 22. (I am the 22-year-old.) — Dalisay
For your mother, the easiest and safest method of card-sharing is to make you all authorized users — but to not allow any of you to have actual access to the account. This is not as strange as it may at first sound.
Authorized users have the right to charge on the owner’s credit card account, which is an inherently risky relationship. If your mom grants you formal permission and then hands over the cards imprinted with your names, each of you can make some pretty extreme charges. However, she alone would be responsible for paying the bill.
Mom may owe nothing now, but a $10,000 credit limit means that much can be charged with a few grand swipes. Giving anyone — even trusted relatives — that much unrestricted borrowing power would make most people uneasy.
If your mom wants to help you build a credit history as authorized users, but not provide you with the ability to charge items, she can do that. To make you authorized users, she’ll need to contact the card issuer and request credit cards be issued in your names. The fastest way is online via the issuer’s website, but she can also call the customer service number. She will need to provide your names, addresses, birth dates and Social Security numbers, then specify that the cards should be sent to her mailing address.
When the cards arrive, your mom can tuck the stack of plastic in a secure place, far away from those whose names match them. By doing this, she will be 100 percent in control of the account, and she will never have to worry if one of her children is going crazy at the mall, misplaced the card, or let a friend use it.
As long as your mom manages the account well, you as authorized users will benefit from her credit history. The credit issuer will send information about her use of the card to the three big credit bureaus (TransUnion, Equifax and Experian), and this payment record will be reflected on all of your consumer credit reports. Credit scores such as the FICO and VantageScore are developed from the data on these reports, and both credit scoring systems rank payment pattern as the most important factor. If mom pays on time and keeps the balance very low, all cardholders will benefit. This is also called piggybacking.
That’s the most secure way to share a credit card account — but if your mom also wants to let you charge on her account, she can put measures in place to try to keep you all in line:
1. Establish charging rules. What the card can be used for, how much you can you charge, and when and how you will pay her back should all be put in writing. Consequences for abuse of charging privileges must be clear: If you falter, what will happen? That’s up to her.
2. Teach you the basics of credit. Your mom should explain interest, fees, credit reports and credit scoring to each of you. If she is unclear on these credit basics, she should take the time to learn first.
3. Monitor the account daily. If four additional credit cards are in the possession of four individuals, an exponential amount of damage can result. Instead of waiting for the account statement to arrive in the mail so she can spot trouble, your mom should make a regular habit of checking online to make sure the account is being used properly.
As the account owner, your mom can revoke any authorized user’s status at any time — and an authorized user also can give up the card. In either case, the account will no longer be listed on the credit report or factored in the credit score of the authorized user.
If your mother does make you authorized users, whether she lets you charge or not, acknowledge that she is giving you quite a gift – helping you to build your credit. Thank her profusely and honor all agreements.
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