Adding an authorized user to your credit card has benefits, including earning rewards from authorized user spending. But it can lead to confusion about whom those rewards belong to. Though credit card rewards belong to the primary account holder, some credit card issuers allow authorized users to redeem rewards. Whether you’re adding a family member or business partner, understand how issuers treat rewards earned by authorized users and how to avoid conflict from unclear expectations.
Who Owns Credit Card Rewards?
The primary cardholder — the person who opened the account and is responsible for paying bills — controls the rewards earned on a credit card account. An authorized user can help a primary cardholder earn rewards (and might help make payments), but those ultimately belong to the primary cardholder. However, cardholder agreements typically stipulate that rewards aren’t considered property and don’t have any value until redeemed.
Purchases made by an authorized user earn rewards for the primary cardholder, says Leslie H. Tayne, debt relief attorney and founder of Tayne Law Group. “The primary account holder is responsible for all transactions made by themselves or any authorized users, and is the one who will receive any rewards earned on the account,” she says.
[Read: Best Rewards Credit Cards.]
Credit Card Issuer Rules for Accessing Rewards
While credit card rewards belong to the primary cardholder, some issuers allow primary cardholders to designate account managers who can redeem rewards. Account managers are a type of authorized user with extended permissions, such as the ability to pay bills and redeem rewards. For example, a Capital One account manager is an authorized user who has their own card and login and can earn and redeem rewards. However, other issuers, such as Chase, don’t allow authorized users to redeem rewards.
Here’s a look at authorized user rewards access among major credit card issuers:
[Read: Best Credit Cards.]
Conflicts Over Credit Card Rewards
Disputes over credit card rewards can happen, especially when expectations aren’t clearly defined between primary cardholders and authorized users. Family members, spouses and business partners may assume that rewards earned from their purchases are accessible to them — especially if those rewards become a valuable stash.
“One person may assume the rewards earned based on their purchases are theirs, only to find out they do not have access,” says Len Covello, chief technology officer at global loyalty technology provider Engage People. “Conflicts are also often visible when a primary cardholder passes away.”
Tayne says there may be conflicts over credit card rewards in divorce cases or business partnerships, and while disputes are rare, issues can be resolved with negotiations.
Even when there’s no legal fight, authorized users may feel slighted if they’ve earned significant rewards but don’t have a say in how they’re used.
Clear communication can help prevent misunderstandings. Before adding someone as an authorized user, set expectations early and discuss how rewards will be earned and used. Use tools to manage spending, such as alerts or spending limits, for authorized users to keep spending in check. If a relationship changes, primary cardholders can remove authorized users.
“To avoid conflicts, set clear expectations from the beginning, document disagreements and designate a system for how rewards will be used or divided, even if informally,” says Covello.
[Read: Best Travel Rewards Credit Cards.]
What’s Fair When Sharing Credit Card Rewards?
While rewards belong to the primary cardholder, what’s fair depends on your relationship to the authorized user. When authorized users significantly contribute to rewards earning, it may seem reasonable for them to expect some benefit in return.
If an authorized user helps earn points with everyday spending or large purchases, you may agree to use rewards for a shared goal, such as for a family vacation, or dividing the cash back. Authorized users who help make payments may have more skin in the game. Although these informal agreements won’t override credit card issuer terms, they can help everyone feel respected and prevent resentment.
“Up-front transparency and thoughtfulness can help prevent misunderstandings and ensure all parties benefit,” says Covello.
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Who Owns Authorized User Rewards? Sometimes, It’s Complicated originally appeared on usnews.com
