How to find the best authorized user credit card

Adding an authorized user to your credit card account isn’t a decision to be taken lightly. The potential danger is clear: A card user could rack up big bills that you didn’t approve, but which you still must pay.

One way to reduce that risk is with credit cards that let you set a spending limit for authorized users. Your options, however, are limited:

• American Express is the only major issuer we found that allows account holders of all its personal cards to set customized limits for authorized users, preventing them from accessing your entire credit line.
• While most of Citi’s consumer cards don’t let you set limits for authorized users, its Costco Anywhere Visa®Card does.
• Many small-business credit cards also allow you to set spending limits for authorized users, which are usually employees. Qualifying for a business credit card might be easier than you think.

Why don’t more do it?

“As a parent who someday plans to add my kids as authorized users on my credit cards, I wish more cards offered the option,” says NerdWallet credit card expert Sean McQuay. “That said, I can see why it’s so rare.”

First, most authorized users are spouses, for whom spending limits may not be appropriate. “Second, banks actually have very little to gain from such an offering,” McQuay says. “In reality, they want to enable more spending, not less.”

Whichever card you use, you’ll be able to keep tabs on an authorized user whose spending may cause you concern, whether it’s a student or friend who’s building credit, or an employee.

Here’s what you need to know.

Who is an authorized user?

An authorized user has a separate card in his or her name and is able to tap the credit line of the primary account holder. Sometimes the authorized user is a spouse, who might not need restrictions. But some cardholders may add someone who is having difficulty qualifying for his or her own credit card due to poor credit or lack of credit history. For business owners, an employee could be an authorized user. The primary account holder must pay for all charges on the card and might want safeguards.

For ultimate control

As of mid-2016, American Express is the only major issuer that allows account holders of all its personal credit cards to place spending limits on authorized users.

You can set custom spending limits online or by contacting customer service. You can set a dollar amount for spending per billing period and receive emails or text messages when the user reaches that limit and when he or she is blocked from making more purchases. Limits can be changed or lifted anytime. Don’t have an AmEx? Check out NerdWallet’s best American Express cards.

One non-AmEx personal card, the Costco Anywhere Visa®Card, also allows custom limits. This feature is a holdover from the old TrueEarnings® Card from Costco and American Express. Costco switched its business from AmEx to Citi in June 2016.

Get down to business

Some small-business credit cards — including from American Express, Citi, Chase and Bank of America® — allow you to set spending limits for authorized users. Rules for qualifying as a business differ among issuers. Accounts are intended for business purchases, and authorized users are typically employees. Check out NerdWallet’s favorite small-business credit cards, and verify with the issuer that it allows you to cap employee spending.

Trust but verify

If you have concerns about an authorized user, track his or her spending by logging into your online account and noting recent purchases. Some card issuers itemize charges by user, making it easy to identify purchases made by authorized users.

Set email or text alerts for spending. Card issuers differ in what types of notifications they allow you to activate. Monitoring account activity won’t prevent overspending but will give you an early warning so you can quickly address problems with an authorized user.

Investigate whether your card has specific features that might help control the spending of authorized users. For example, Discover offers Freeze It℠, an on-off switch that allows you to halt spending on the entire account, including that of authorized users.

Gregory Karp is a staff writer at NerdWallet, a personal finance website. Email: gkarp@nerdwallet.com. Twitter: @spendingsmart.

This article first appeared at NerdWallet.