Instead of having individual credit card accounts, many couples or families find it easier to have multiple cards issued on a single credit card account. But if your credit card charges you a yearly fee for each additional cardholder, it could come as a nasty surprise. Additional card fees range from a token amount (e.g. $15 p.a.) to as much as $100 p.a. These fees can be avoided by choosing a credit card that makes no charge for supplementary cards.
How many additional cards do you need?
When you choose a credit card that allows free supplementary cardholders, you can allow someone else to access your credit card account with no additional costs. While many cards permit only one free additional card, others may allow up to 10, or even unlimited extra cards. However, cards providing for more than 10 extra cardholders at no charge are most likely to be business credit or charge cards designed for issue to multiple employees.
Where the number of free additional cards is limited, it may still be possible to add further cardholders by paying a fee.
Primary cardholder’s sole responsibility
The primary cardholder has sole liability for any debt on the card account, including any purchases or cash advance transactions made by supplementary cardholders. This situation prevails even for business credit cards issued to employees, unless the card account is held in the name of a company rather than an individual.
Share the benefits
The ability to have free supplementary cards is an important feature if you want members of your family to enjoy some of the benefits you receive as the primary cardholder. All additional cardholders can use the card to make their own purchases and payments. You can also allow them access to the credit card account through online banking.
Most credit card complimentary insurance policies covering purchases against loss, theft or damage for a limited time, or offering price protection or extended warranty, will also cover any purchases made by supplementary cardholders. Travel insurance cover, however, can be variable. For most cards, supplementary cardholders will be covered by complimentary travel insurance even if they are not accompanied on the trip by the primary cardholder, but this is not always the case. It’s always best to read the terms and conditions carefully if you are going to rely on a credit card’s complimentary travel insurance.
Earn rewards points faster
If you can be approved for a card which earns rewards or frequent flyer points at an accelerated rate, when additional cards are provided free of charge it can make sense to pool family points earning into one card. Points are earned more quickly when several individuals are making purchases, and they are consolidated into one account (the primary cardholder’s points account) meaning that redemption targets are met sooner. There’s no need to transfer frequent flyer points when making flight bookings, because the primary cardholder can make bookings for the whole family.
Consolidate your finances
When all members of a household share a credit card account, tracking the family budget is simplified because most expenses will appear on a single monthly statement, and some card providers will even provide further analysis under various expense headings.
Features to check
When applying for a credit card with free additional cardholders, consider the following points:
- Is the available credit limit large enough to cover spending by all cardholders on the account?
- Is the number of additional cardholders allowed too restrictive for your needs?
- Is the saving made on additional cardholders outweighed by other higher fees, such as primary annual fee, higher interest rate, and foreign transaction fees?
Educate your supplementary cardholders
Remember that giving someone a supplementary card on your account is a bit like handing over your wallet and telling them to take whatever they need. So make sure that the person in question understands the basics of how credit cards work (especially if they are a teenager), including the following:
- Although payment for purchases is delayed, full repayment has to be made once a month in order to avoid high interest charges
- Cash advances should be avoided because of the high interest rate applied immediately
- Some purchases, such as gambling transactions, count as cash advances
- The card should be kept in a safe place, the PIN not disclosed, and its loss or theft reported immediately
Cardholder minimum age
You don’t need to be related to someone who holds a supplementary card on your account, although it would be seriously unwise to give one to someone you could not trust to behave sensibly with your line of credit. Typical additional cardholders will be the spouse or child of the primary cardholder. Most providers will only allow individuals aged over 16 to be additional cardholders.
Adding a cardholder
A supplementary card can be requested when you first apply for your credit card. Alternatively, it can be added later by contacting your card issuer and providing any required identity documentation.
The additional cardholder does not need to have a good credit rating. The only credit rating of interest to the card provider is that of the primary cardholder with sole responsibility for the debt.
All of the cards listed below offer one or more additional cardholders free of charge, so compare their features to find out which one suits you best.