Control Family Spending with Add-On Credit Cards
Using a credit card in an organized way can be an excellent ally for your finances and those of your family.
One way to control spending at home can be through additional cards. This product can be useful for those parents who send their children to college or to pay household expenses, even for those who want to take financial responsibility for a family member.
Additional cards are those that depend on the same account of the main cardholder, who can grant them to a family member over 18 years of age to make purchases under the same line of credit.
One of the characteristics of this type of plastic is that it can have the same benefits that the cardholder has access to in terms of insurance, benefits, reward points and more.
Therefore, primary card account holders should make sure that the additional cardholder will put the additional card to good use, since the purchases made will be 100% their responsibility. Purchases made will be the responsibility of the cardholder. Even if the beneficiary agrees to pay the bank, the additional cardholder is 100% responsible for the additional cards.
The most common uses of this type of plastics are family matters such as spouses and children. Therefore it is not advisable to give this type of plastics to friends or people who are not so close. The suggestion is to give this type of card to your children, who are not yet financially independent but need liquidity for college or some bank movement, or for a couple that has very well structured and organized their finances.
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The process to get an additional card varies from one bank to another. In some cases, you only have to talk on the phone to authorize it, while other institutions ask for some requirements such as a copy of the ID of the person who is going to use it and even some validation. In most cases, banks offer them free of charge and do not have to pay annuity fees compared to the cardholder’s card.
To cancel it, the cardholder can do it at any time, since he/she has control of the extra card and can decide to cancel the additional card. And the bank will not put any restriction, since the credit holder is the one who will keep the debt in his/her original credit line.
Some benefits that this type of plastic can have is that the cardholder decides the amount of credit line on the additional card.
The cardholder can decide how much of that credit line he wants to share with the additional plastic. In most banks you can put a limit on it. It can be a proportional amount. It is a way to maintain control and thus reduce the potential risk of these plastics.
To the holder’s relief, his account statement shows the transactions made with both cards. Both expenses are added together and that will be the amount the cardholder will have to pay. The calculation of the minimum payment, rewards and everything that is calculated in the account statement will be based on this information, since it is the same credit.
Once an additional plastic has been issued, it must be in the name of the additional cardholder who will use it, in order to avoid problems at the time of payment, and for the banks to identify who is using this card.
One of the main disadvantages of this type of plastics is that the holder must absorb the expense made by them. So any delay in debts directly impacts the person responsible for the account.
The credit history that is damaged is of the primary card holder, and the obligation to the bank is of the account holder.
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Another disadvantage is that they do not generate a good or bad credit history for the cardholders who use them, so, in case they want to obtain a plastic in their name, they would not count as a reference.
There are certain benefit programs that accrue directly to the account holder and not to the beneficiaries.
Regarding the annual charges of this type of cards, it depends a lot on the bank from which it is requested, as well as the product, since some do not charge it and others do have a cost.
I am Nikesh Mehta, owner and writer of this site.
I’m an analytics and digital marketing professional and also love writing on finance and technology industry during my spare time. I’ve done online course in Financial Markets and Investment Strategy from Indian School of Business. I can be reached at [email protected] or LinkedIn profile.