Authorized Users Can't Access Rewards Without Special Permission

Dear Cashing In,

I'm considering being an authorized user on a friend's credit card because my credit stinks and his doesn't. The card's a Capital One miles card. My question is this: If I become an authorized user, will my friend get all the points from the money that I spend?


Dear Curious,

That would be up to your friend. By making you an authorized user of his Capital One card, he grants you the ability to make purchases using his card but not to access the card's balance or, according to Capital One's website, "even discuss the account with a customer service representative." If he's extremely generous, he could, in a separate transaction, also grant you full access to his card's reward points.

I say "extremely generous" because there is no way for him to limit your access to only the rewards your spending has purchased. You would have access to his miles as well. As primary cardholder, your friend would have to authorize you as a "redeemer," giving you the ability to inquire about, redeem or transfer the rewards on his account at your discretion. It's an all-or-nothing proposition.

It seems more likely that your friend will let you make charges on his credit card account but keep control over the rewards, which would mean he gets the points for whatever charges you make on his card. The card is in his name, after all, not yours -- and so is the ultimate responsibility for paying it off.

You would essentially be trading on your friend's good credit in order to boost your own not-so-good credit,by having his card appear on your credit report. (By the way, it's a good idea to check with the credit bureaus a month or so after you're put on the account, just to make sure your use of the card is being reported.) This doesn't hurt your friend or his credit as long as you pay your end of the bills on time. The trade-off for him would be that your spending boosts his reward points.

The only way you could share credit card rewards with your friend, other than having him authorize you as a redeemer, is by opening a credit card account with him as joint account holders. In that case, you would both be legally responsible for the debt. If you become an authorized user of your friend's credit card, on the other hand, he assumes legal responsibility for your debt as well as his.

If your goal is to boost your credit by piggybacking on your friend's, you're probably hoping to benefit from the credit history of his already-established credit card. So your dilemma, I assume, is whether to use his card or get your own reward card.

The question to ask yourself: What's more important right now -- improving your credit or racking up rewards? You say your credit stinks, but assuming it isn't so bad that it disqualifies you from a rewards card, you could achieve both goals by making charges on your own card and paying off the balance every month. It may take longer to raise your credit score, but perhaps it fits your life plan.

If your dream, for example, is to travel the world for the next five years before settling down, you could grab the best airline rewards card you qualify for, pay it off every month, and take advantage of the travel rewards as you gradually repair your credit.

If, on the other hand, your goal is to buy a house in the foreseeable future, perhaps those frequent flier miles can wait while you focus on boosting your credit as fast as possible. Believe me, if your credit truly stinks, it's going to hurt you if you try to qualify for a mortgage -- especially one with decent rates and terms.

If you do decide to take advantage of your friend's offer to sign you on as an authorized user, you could consider the reward points you're adding to his account a reward in the literal sense -- his reward for taking a risk on your bad credit history. Nothing spoils a friendship faster than unpaid debt, but the occasional free plane ride might make him glad he took the chance.