What are Add-on Credit Cards and How they Work?
An additional card (or add-on card or supplementary card) is an financial product that arises from the need to support other people, mainly dependent members of a family.
They are useful, for example, for parents who send their children to college and want them to have a means that allows them to cover their expenses. And for couples who organize themselves through credit cards. And even for those who decide to take financial responsibility for someone outside their family.
If you are thinking of applying for an add-on card, you should bear in mind that as a cardholder you will be under obligation for all the transactions done with this supplementary credit card.
What is an add-on credit card?
An additional credit card is an “extra” plastic that allows the beneficiary to access the account holder’s line of credit. It is usually issued in the name of a family member of the account holder, although it is not mandatory. The purchases and withdrawals made by the additional cardholder appear in a section of the cardholder’s account statement and it is the cardholder who is legally obliged to make the payments of the credit balance and the applicable interest.
Check out: Easiest add-on credit cards to get in India
Who can get supplementary credit card?
Any person over 18 years of age can be an add-on credit cardholder. However, it is the account holder who requests and approves the issuance of additional credit cards to his/her account.
How these cards work?
After requesting the additional plastic, a card of the same color and appearance as the additional card but in the name of the additional cardholder and with a different account number will arrive at the cardholder’s home. The objective is to distinguish the purchases made by the cardholder from those made by the additional cardholder.
The plastic must be activated by the additional cardholder, who must do so by calling the numbers on the activation label. Once activated, the plastic can be used to make purchases and withdrawals up to the cardholder’s credit line or the amount authorized by the cardholder.
The cardholder will receive an account statement with the transactions made on his/her credit line and must make the payment before the agreed date.
Do additional cards help build credit history?
The answer is NO. Since the cardholder is responsible for the credit, this type of card does not create credit history for the additional cardholders. If you are interested in cards for people with no credit history, read this article.
What happens if I do not authorize or refuse to pay purchases made through this card?
This is the biggest risk when granting an additional card. Unfortunately, primary card holder is responsible for paying off the debt. Before the law and the bank, any purchase made by the additional you must settle it in case of non-compliance.
There are countless horror stories of couples fighting, forgetting to pay off the add-ons and that is where the low blows happen.
What can I do to limit the risk when granting an supplementary credit card?
- Only give it to people you trust. Think it through and rethink it.
- Consider cards that allow you to assign a specific credit limit for additional cards. This allows you to set the amount your children or family members can spend and increase or decrease it when necessary.
- Check your account statements regularly and be aware of the amounts and places where the additional card is being used. In case of discrepancy or abuse, talk to the person in charge and establish the rules of the agreement.
- Request cancellation of the plastic by calling your bank.
Other important facts/benefits of additional credit cards
- Additional card users cannot request a credit increase, close the account or authorize over-limit purchases.
- Additional cards DO participate in promotions, interest-free months and discounts.
- Among the benefits of having additional cards is the fact that the use of these cards adds points to the cardholder’s rewards program.
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.