Pros and Cons of Add-on Credit Cards

Pros and Cons of Add-on Credit Cards

Add-on credit cards, also called supplementary cards, are given with a similar credit limit and perks as the main card. They're given to family members like parents, spouse, or children above 18. Usually free, but not many people use this perk. There's a limit on how many add-on cards you can get and some rules to follow.

How Add-on Credit Cards Work

Most credit cards offer add-on cards, but the number allowed depends on your card type. You can find out when you apply. Usually, you can get a few add-on cards for free, like up to three, but there's a limit. After that, you might have to pay a joining and yearly fee for each extra card you get.

Remember, transactions on supplementary credit cards will be charged to the primary card's account when it's time to pay the bill. All details are also logged on the primary card's statement for easy tracking. The credit limit for all add-on cards combined won't exceed the total limit on your primary card.

Pros of Add-on Credit Cards

With add-on cards, you get extra perks like a higher spending limit, more rewards, reaching spending goals faster, and more. Here are some simple advantages of add-on credit cards:

Accumulate Reward Points on All Cards

You can earn reward points on all your cards. When you pay with any card, the rewards go to your main card. This makes it simpler to collect more points. You can use these points for gifts, items, or even turn them into air miles if your card allows. Having more add-on cards means more chances to earn rewards.

Introduction to Credit for Secondary Users

Giving your child an add-on credit card can be a good way to introduce them to credit. However, it's important to teach them to keep track of their spending, understand their statements, and learn about reward points. Even if someone doesn't qualify for their own credit card due to a low credit score or other reasons, they can still benefit from an add-on card. While add-on cards don't directly impact the secondary user's credit score, they can provide extra spending ability and help them learn about credit.

Achieve Spending Milestones Quickly

Many premium credit cards provide milestone benefits, where you get bonus reward points or a fee waiver after spending a certain amount. It's harder to reach this spending target with just one person using the entire credit limit. But if the limit is shared among two or three people, more purchases can be made, making it easier to reach the milestone.

Cons of Add-on Credit Cards

The main drawback of giving someone an add-on credit card is that it can impact the primary cardholder's credit. Because all charges are billed to the primary cardholder's account, any late payments or defaults will directly affect their credit score. If you, as the primary cardholder, don't monitor the total spending by secondary users, it could harm your credit score.

Who Can Apply for an Add-on Credit Card?

If your main credit card allows it, you can apply for an add-on card by filling out an application form. You can get add-on cards for your spouse, parents, children, and siblings who are at least 18 years old. But the rules may differ depending on the credit card company.

Things to Keep in Mind Before Getting an Add-on Credit Card

Before getting an add-on card:

  • Make sure the person is responsible with money because their spending affects your finances and credit score.
  • Ask your card issuer about the terms. If it's a no annual fee offer, check if it's just for the first year or if it's free forever.
  • Add-on cards are good for people over 18 who understand credit basics before they get their own card.
  • Like any deal, there are lots of rules with add-on cards. It's smart to ask questions upfront so you don't regret it later.

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