For savvy credit card users, authorizing a child or spouse to use the card instead of opening their own account can help family members avoid credit card debt in the case of a death or bankruptcy. However, there are also pitfalls to this practice that both the authorized users and the original cardholder should take into consideration.
Many credit card companies allow cardholders to open accounts and then authorize users by having the individual issued his or her own card. However, unless the user’s credit information is considered in granting the application, the authorized user is generally not liable for the debt incurred on the card. Only the original credit card holder is liable for the balance.
This can present a problem for the credit card holder if the authorized user puts charges on the card indiscriminately. The original card holder should be sure that any authorized users understand their limitations in using the card and that they abide by them. The authorized users should also be aware that the credit information about the card may be entered on their credit reports, so if the original card holder fails to make the payments, it may affect the authorized user’s credit, as well.
In some states, spouses can be held responsible for a deceased partner’s credit card under certain laws. Whether or not a spouse has been an authorized user, it pays to consult a bankruptcy attorney if the individual believes he or she may be liable for credit card debt incurred by another person.
Source: Fox Business, “Is Authorized User Liable for Deceased’s Card Balance?,” Erica Sandberg, Dec. 21, 2012
