Many parents have faced with the situation when their son or daughter is going off to college in another state and they need to give them emergency cash reserve. However, there is a probability that the kid will spend the money beforehand. One of the best ways round this problem is to let your son or daughter use your credit card. Thus you can control how they are spending money or increase the available credit if it is necessary. This article will tell you about the main aspects of having an authorized user on your credit card.

Authorized users are persons who you legally allow to use your credit card account without an obligation to pay off the debt. Authorized users don't sign a credit card application indicating that they accept the terms and the responsibility to eliminate the credit card debt.

As a credit card owner, you can add an authorized user at any time. Some credit card applications have a space for requesting an additional plastic for another person, or you can write to your bank and request one. Typically, authorized users are family members: unmarried couples living together or teenage children.

The authorized users will receive his own card with his name on it, but he will actually use your account. Collectively you have the same credit card limit. If your authorized user makes a purchase with the card, this reduces your credit card limit - until you have eliminated your balance.

The authorized user is not responsible for payment of the credit card bill. Only the account holder who signed the agreement is liable for making regular on time payments.

If you have a rewards credit card, you can earn more points or cash back. When your authorized user makes a purchase, you earn rewards on his spending as well.

As you can see, an authorized user can have all of the privileges of being a credit cardholder without an obligation to repay the charges. However, what about you? If you decide to add authorized users to your credit account, watch out for the following pitfalls:

• You are liable for authorized users' spending! If he overspends, so do you. An authorized user can max out your credit card limit. But only the person who opened the account will be liable for paying off the debt. That's why you should be very careful whom you name as an authorized user on your accounts: there is considerable potential for financial losses.
• FICO score model doesn't take into consideration authorized user accounts. There was too many credit fraud connected with this option: credit repair companies sold authorized user account access to consumers with bad credit. That's why now all credit activity - good or bad - is reported to the account holder's name only. Even if authorized users make regularly on time payments, it won't help them build credit history.

• Sometimes you can be charged a fee for the privilege of having a credit card authorized user.