“The wiser you are with a credit card, the better your finances will be”

Credit cards have somewhat become a necessary accessory to our finances. The convenience offered by credit cards is endearing. They offer a sense of financial security along with a feeling of luxury. Banks and Financial Institutions have raked up a whole spectrum of credit cards to suit individual aspects of your life, viz, Lifestyle cards, Fuel cards, Travel cards, Entertainment cards, Co-branded cards and many more. They also offer the benefit of worldwide acceptance alluring to the nomad population. 

One can easily get secondary cards or add on cards to provide to their family members so that they can manage a single account with all the cards. This also supplies them with better credit limits and more benefits with their purchases in the form of reward points. A primary credit card holder can apply multiple secondary credit cards to suit their family needs. Secondary cards are seeing an increase these days amongst friends and colleagues too. Corporates are opting for add-on cards to provide their senior management executives. 

However, the powers and responsibilities of a primary cardholder and a secondary cardholder are different. If is important to understand the responsibilities of either of them to efficiently manage your credit card account. 

Primary Credit Card Holder VS Secondary Credit Card Holder

In India, Secondary credit cards or Add-on cards as they call it, are usually offered to blood relatives of the primary cardholder, viz. spouse, parents, siblings & children. This rule is fast changing and secondary cards are now allowed to friends and colleagues too. Though both the primary and secondary card holders operate the same account and share all the privileges that come with the card, there are restrictions on their account based actions. The secondary card holder might not have complete control on the card’s credit limit and spending. 

Responsibilities of a Primary Cardholder

Solely responsible for payments – The Primary cardholder is the authorized person on the account and is hence responsible for payments of the dues, including the secondary cards, on that account. Therefore, any default or non-payment of the outstanding amount will adversely affect the primary cardholder's credit score. 

Have authority to add or remove secondary cards – The primary cardholder holds the authority to add or remove the secondary cardholders from the account. At any point of time, the primary cardholder can contact the bank and have the secondary card cancelled or revoked. 

Set credit/spending limits on the secondary cards – You can decide the limit on the secondary cards, both the credit limit and the cash limit. This feature enables the primary cardholder to keep a check on the spending of the secondary cards. This can come in handy when providing secondary cards to children or young adults. 

Cancelling the card – Similar to above powers, the power to cancel a card lies with the primary cardholder. Though the secondary cardholder gets all privileges relating to the spending on the card, they cannot however cancel a card. That ability lies only with the primary cardholder. 

Responsibilities of a Secondary Cardholder

A Secondary cardholder can get a separate credit card with their name and information, but you are not the authorized person for the account. The card is part of the primary credit card account controlled by the primary cardholder and various account modification powers lie with them. However, you are able to enjoy the offers and privileges that come with the card. 

No effect on your credit score – Since the primary cardholder is the authorized person on your card, the liabilities on the secondary card do not affect your personal credit score. 

No authority to modify/change the account details – Being a secondary cardholder you cannot make any changes to basic account details like credit limit, adding or removing secondary users, changing payment due date, etc. 

Equal responsibility towards payment of dues – The secondary cardholder should act responsibly and contribute equally towards the card payment. Failing to do so might result in defaults which might have an adverse effect on their card limit too. 

Pros and Cons of owning add on credit cards

 The greatest benefit of having add on cards is the Rewards programme. With multiple users, the number of reward points will also increase, thus adding more benefits to the reward programme

 The primary cardholder is solely responsible for repayments. So, if the secondary cardholders are irresponsible and don’t contribute towards payment dues, it might be a huge burden on the primary cardholder. Credit card companies are known to resort to extreme measures to collect their dues

 You get the advantage of a single statement for all the purchases that allows better management of your credit card

 One person's extravagant spending habits may eat in to the credit limit of other card holders

 Allows for greater control on the spending habits of teens or young adults by parents

 Multiple credit cards may create greater liability hence adversely affecting your monthly budgets

 Allows people with low or unfavourable credit scores to enjoy the benefits of credit cards

 Having multiple secondary cards may incur higher annual fees or charges

Bottomline - Finally, whether or not you want to add a secondary credit cardholder to your account, it is important to take into account all the benefits and risks involved in the decision to ensure that this will be a long-term advantage for both the primary and secondary users. Though add on cards are common amongst family, where the trust is high, it is becoming common amongst friends and colleagues too. It is prudent to go in for a solid, likely written agreement between the two parties in terms of payment, use, and how to resolve any negative situations that may occur with the account to avoid any future unpleasantries.