Authorized Users Are Not on the Hook for Unpaid Credit Card Debt

Say you’re an authorized user on a credit card. One day, the cardholder who added you to the account as an authorized user stops paying or dies. Are you on the hook for the unpaid credit card debt on that account?

Luckily, the law is very clear here. You are not liable for the cardholder’s balance. And that includes any items you yourself charged to the account.

But that may not stop collection agencies harassing you for the money. 

What is an authorized user?

An authorized user is someone added to a credit card account by the primary cardholder. They can make purchases but they're not financially responsible for the debt. 

An authorized user can't manage the account or change the card's terms. Those tasks and responsibilities belong to the primary cardholder.

The activity on the card (by both the primary cardholder and the authorized user) can be reported to the credit bureaus. Keeping the balance low and making the payments on time could help both users build or maintain good credit.

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Authorized user vs. cosigner: key differences

An authorized user usually has access to their own physical credit card, and can make purchases on it. They aren't legally responsible for repaying the debt. They benefit from the account’s credit history without being liable for any balances.

A cosigner, on the other hand, shares full financial responsibility. If the primary cardholder defaults, the cosigner must pay off the debt. A cosigner affects both parties' credit and obligations. An authorized user, however, has no liability.

Who is liable for unpaid credit card debt?

Only two types of people are on the hook for outstanding balances on a credit card or store card:

1. The principal cardholder. In other words, the person who opened and owns the account.

2. Anyone who cosigned the account application. A cosigner is someone who provides their identity and financial information to the lender as a way to help the primary applicant qualify. The cosigner doesn’t get the privilege of using the account, but becomes financially responsible for it if the primary account owner fails to repay the debt.

Debt collectors can make mistakes 

It’s possible for authorized users to be hounded for an unpaid debt. Sometimes debt collectors make mistakes. They may have received little paperwork about an account they’re trying to collect on. They may assume that a stray name associated with an account is a cosigner rather than an authorized user.

Other times, the collection agency knows very well that you have no legal liability for the debt. But that doesn’t stop it from trying to gaslight you into paying. 

Debt collectors can take shortcuts

By law, it is the duty of the collector to prove that you owe a debt. But some agencies skip right to collecting on a debt without doing their homework. 

However, there may be a way to prove you are an authorized user and not a cosigner. Credit card companies typically report authorized users’ status to credit bureaus. 

Get a copy of your credit report. You may find you’re listed on the report only as an authorized user for that account. 

You’re legally entitled to a free copy of your credit report every week. Get yours from AnnualCreditReport.com, the only website authorized to provide the free credit reports you are entitled to by law. 

How to stop collector harassment

Not all agencies are honorable. Sometimes the calls, texts, emails, and letters don’t stop.

Everyone who’s being harassed by collectors is protected under the Fair Debt Collection Practices Act (FDCPA). You can write a letter to your collector instructing it to stop all contact with you. Be sure to cite the act, keep a copy of your letter, and mail it with proof of delivery requested. 

Anyone can write this letter, even if they really do owe the money. Collectors must then halt all communications. 

Whether you owe the money or not, some collectors might ignore your letter. Keep a record of all subsequent calls. It’s a good idea to start a file with copies of all electronic and regular written communications. Screen grabs can help you build an electronic dossier.

Then you can report the collection agency to the Federal Trade Commission and your state’s consumer agency. You might even be able to sue them for money.

Can being an authorized user help your credit?

Yes, being an authorized user can improve your credit score. But, it depends on the primary cardholder's financial behavior and credit habits. On-time payments and a low balance can boost your credit report. Some credit card issuers report authorized user activity to credit bureaus. It can be an easy way to start building credit history without being responsible for the debt. 

However, you must manage the account well and the primary cardholder must practice good credit habits. On the flip side, negative activity like falling behind on payments and a high credit usage could hurt your credit.