What’s the difference between an authorized user and an employee card?
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Being on top of your accounts and making smart decisions is key when it comes to improving your credit standing. Building your credit in a smart way can help you achieve your goals — better credit means a less worrisome financial future.
Paying off any high credit card balances you have, checking your credit reports for errors and keeping an eye on your credit utilization rate are all key aspects of building and maintaining good credit.
If you keep your debt low, the ratio of debt to your total credit limit will also stay low. Most importantly, you’ll want to focus a lot of energy on paying your bills on time every month. Here are some of the smartest ways to build credit.
How to Build Good Credit
First of all, if you don’t have credit, just know that any account you open will need to stay open for six months in order for you to have a credit score (the credit reporting agencies need six months to monitor and report your activity, too).
To begin seeing FICO scores you will need the minimum of six months. However, a VantageScore is more commonly given to those that have very little or no credit history because a VantageScore only requires that you have one month of history.
The VantageScore is a credit score that was developed by the three major credit bureaus: Equifax, Experian, and TransUnion and provide lenders with some insight on a consumer’s creditworthiness and whether they can pay back the money they are borrowing.
As of 2006, the VantageScore has begun competing with FICO scores because while they were based on different scoring ranges initially, they both now follow the 300-850 score range.
VantageScores and FICO scores are broken down into several different categories including payment history, credit age, credit utilization, balances, recent credit applications, and available credit a consumer has. The payment history and the percentage of credit are the two most highly influential elements when it comes to the consumer’s credit score under the VantageScore scoring model. Total balance and recent credit behavior fall into the less influential categories.
Building credit history takes a while when you start from nothing, but the cards and loans we’ll discuss can help you jumpstart the process.
1. Apply for a credit card
Many credit cards for building credit, including secured cards, work well for establishing a solid credit score. Just choose a routine monthly expense, charge it on your credit card and pay the account in full each month. Payment history makes up 35% of your credit score, so making a series of on-time payments can really help your score.
If you don’t believe you will be able to pay that balance in full at the end of the month, then you should reconsider how much you spend on the card.
A secured card is a good option for consumers with no or very little credit and if you need to build credit from scratch. After a year or so of on-time payments, you’ll build enough credit to qualify for an unsecured credit card. (You can go here to learn more about the best-secured credit cards on the market.)
2. Apply for a credit builder loan
Believe it or not, there are loans out there designed specifically for people looking to build credit from scratch or rebuild their credit. (If you’re not sure where your credit stands, you can view your free credit report snapshot on Credit.com. Your credit scores are updated every 14 days, so you can check your progress as you work to build them up.)
An option for building credit the smart way is through a credit builder loan from a credit union. A credit builder loan is an installment loan with terms ranging from 6 to 18 months. Since credit builder loans are reported to one or more of the three national credit reporting agencies, on-time payments for the loan will build up your consumer credit.
It’s a good idea to choose a credit builder loan that reports to the three credit reporting agencies — Equifax, Experian and TransUnion. That way, you’ll see proof of your on-time payments in credit reports from each of these companies.
With a credit builder loan, a lender places the money being borrowed into a savings account on your behalf and you pay off the loan through a series of monthly payments. You get access to the money in the savings account when the loan is paid in full.
So, with a credit builder loan, you build consumer credit, and you build up some (albeit very, very small) savings, too. Loan amounts for credit builder loans may be small, around $500, so you won’t need to struggle to make monthly loan payments.
Just be sure to make those payments on time each month. If you don’t, late or defaulted payments will show up on your credit report. Then you’ll end up hurting the credit you’ve been working so hard to build.
Still not convinced? There are several positive reasons to join a credit union to help build your credit. First, most credit unions offer their customers excellent face-to-face service. With every interaction with their customers, they are looking to ensure the best possible experience for the consumer and make sure that they accomplish what they need to accomplish financially.
Also, there are fewer fees involved with a credit union when compared to a traditional bank account. You may also find substantially lower interest rates on an auto loan or credit card.
3. Become an authorized user
If you’re good at paying on time each month, consider becoming an authorized user on someone else’s unsecured credit card.
You’ll have much more room for spending compared to a secured card, and you’ll have access to this person’s good credit history. If the credit card issuer reports your activity as an authorized user to the credit reporting agencies, you’re golden.
If not, all your efforts to pay on time (or have someone else pay your bills since you aren’t legally required to pay the balance as an authorized user) and “borrow” someone’s credit history are moot.
When you become an authorized user on someone else’s credit card account, you will receive a credit card that is issued in your name, so you are able to use the credit card to make purchases. Because you are just an authorized user, as stated above, you are not legally financially liable to pay the debt because all the responsibility of the credit card falls on the lap of the primary account holder.
For this reason, many are hesitant to extend this offer to people, so it may not be the most beneficial way to go about building your credit. To remove an authorized user from an account, the primary account holder will have to call the credit card issuer and request that the authorized user be removed from the account. It should also be requested that the credit account be removed from the individual’s credit file as well.
If the authorized user remains on your credit report, then you will have to dispute this with each of the three major credit bureaus after the authorized user has been effectively removed from the primary account holder’s credit card.
How Long Does it Take to Build Credit?
Building good credit and improving credit scores in a safe way takes time. Having said that, if you play all your credit cards right, you could establish a solid baseline card after 6 to 12 months of on-time payments. That’s pretty fast, all things considered, and your work doesn’t even have to stop there.
Here are some other steps you can take to build good credit in the long-term:
Watch your credit utilization. It’s generally recommended that people keep their credit utilization rate below 10%, or at most at 30%, of their total credit limit(s).
Add a mix of credit accounts over time. Credit scoring models reward you for being able to responsibly manage all types of credit. So, if you’ve mastered the credit card (a revolving line of credit), for example, your score could benefit from an installment loan, like an auto loan. That’s not to say you should go out and buy a car simply in the hopes of bolstering your credit. At the end of the day, you only want to take on financing you need and can actually However, adding a mix of credit accounts organically over time can improve your credit standing.
Limit credit inquiries. There’s another reason you don’t want to go out and apply for too much credit at once — all those financing applications will generate hard inquiries on your credit report, which can ding your scores and be viewed as a sign of risk when amassed. So be careful to limit and space out loan applications as you work to build your scores.
Monitor your credit regularly. That’s how you’ll know how you’re doing and what you can work on to improve your scores. It’ll also help you keep an eye out for errors on your credit reports, which are more common than you think. (You can go here to learn how to dispute errors on your credit report.) Remember, you can pull your full credit reports for free each year at AnnualCreditReport.com.
There’s a lot to keep track of, but with some strong focus and planning, you can stay on top of your finances and greatly improve and establish credit. After a year of paying your bills on time, potentially adding a new form of credit and removing any errors from your credit report, your credit could look vastly different.
Know that obtaining a secured credit card or credit builder loan can also greatly increase your potential to build a good credit score in a smart and relatively quick manner.
Keeping your credit up is reassuring because you know that when the time comes to buy a house or car or take out a new loan, you’ll be an excellent candidate.
This article has been updated. It was originally published December 20, 2016.
Getting married can help boost your financial standing, but it doesn’t mean that you and your spouse will share a credit report. Your credit reports will remain separate, and any joint accounts and shared loans you open together will appear on both of your reports. While this can be beneficial, it’s important to keep in mind that the activity of shared accounts could affect both of your credit scores positively and negatively, just like your individual accounts do.
Opening a joint credit account or receiving joint financing means that both of you are legally responsible for repaying the debt. This is important to keep in mind in the case that you split up or separate and your spouse refuses to make payments, even if they were previously agreed to. It doesn’t matter who is “responsible,” the shared liability will cause late payments to impact both parties’ credit history negatively. The creditor considers both parties responsible for the debt until the account has been paid in full, regardless of changes in relationship status or divorce decree.
An authorized user is a user that you add to your previously existing credit account who is authorized to make purchases. Authorized users generally receive a card with their name on it, and any purchases they make will reflect on your statement. The biggest difference between an authorized user and a joint account owner is that the original owner of the account is the only person responsible for repaying the debt. Authorized users can also opt out of their authorized status at any time, while a primary joint account owner cannot.
If your credit score is higher than your spouse as an authorized user, it’s possible that he or she may receive a credit score boost upon being added to your account. This will depend if your creditor reports authorized user activity to the credit bureaus. If your lender does report authorized users, your account’s activity could both positively and negatively affect your spouse. However, some lenders only choose to report positive authorized user information, so a missed payment or poor usage may not have a poor impact on someone else’s credit. Talk to your lender to find out how they treat authorized users on your account.
Whether you are happily married or separated, you and your spouse may make the decision that you want individual credit accounts. Most creditors will allow you to place a previously joint account in one of your names if both of you agree to the change. However, if the account has a remaining balance, your lender may not be willing to remove your spouse’s name unless you can qualify for that same credit individually. Depending on your financial situation, it may be difficult to qualify for financing and credit with a single income.
Although deciding to establish most of your accounts jointly with your spouse can make it easier to be accepted for financing (two incomes is better than one), re-establishing credit individually following a divorce or separation isn’t always simple. To make matters even worse, your spouse can end up doing a lot of damage to your credit standing either purposefully or due to irresponsibility following the breakup – making it even tougher on finances.
Before you decide to jump right in and open accounts with your spouse, take some time to discuss the shared responsibility of these accounts and what you two might do in a worst-case scenario. These kinds of financial questions can be tough to talk about, especially when you are counting on things lasting a long time, but a mutual understanding and respect for each other’s credit can go a long way in maintaining your score when choosing to share an account together.
College life brings a host of new and exciting experiences in the various aspects of your life. Financial independence and responsibility also come to play. While your achievements are important in putting you in your right career path, a good credit score is paramount in bettering the deals you will get when renting or buying a home, purchasing a car, getting a cellphone plan, applying for a student loan or in some instances, getting employment.
This calls on your effort to not only build but also maintain a good credit. It may sound complicated and intimidating especially when you don’t know how to go about it. Below, is all you need to know on how to maintain a good credit score in college.
Taking Advantage of your Parent’s Good Credit
This is commonly referred to as ‘piggybacking’. It allows people with bad or no credit to enjoy a spillover of other people’s good credit. It is a great way of establishing and maintaining your credit especially if you need a little help in managing your budget. For you to qualify for this, you have to become an authorized user of your parents’ accounts.
This comes in handy especially if you can’t get your own credit card; according to Oct 1st 2013 Credit Act report, students and other persons below 21 years of age cannot get their own credit cards without proof of income or at least a co-signer. Apart from the credit boost you get from your parent’s account, your credit card use is forwarded to credit bureaus in your name.
Get the Most Suitable Credit Card
Your ability to qualify for a credit card opens you to the opportunity to choose from a variety of cards. You should research and shop around to find out what these cards have to offer before making your choice. Some of the benefits to look out for include low interest rate, no annual fees, convenient credit limits and other competitive incentives.
Better still, you can opt for student credit cards. These come with incentives such as cashback rewards, limited credit history requirement, no annual fees and 0% introductory APR among other benefits. Your own credit card comes with sole responsibility. This means that it’s up to you to stay on top of your billing statements so as to improve and maintain a good credit
Always Pay your Credit Balance
Your payment history accounts for 35% of your credit. Good credit of course depends on timely and full payment of your balance. Inability to pay or late payment may attract additional interest, accrue more debt and negatively affect your credit.
This can take a long time to repair. Besides this, it is also a sign that you are living beyond your means. Ideally, your credit balance should be about 30% of your credit limit or below.
Tip: The higher your credit balance in relation to your limit is, the worse your credit becomes.
Pay your Bills on Time
Late or failed payment of rent, utility bills, parking tickets, library or school fees and other payments can harm your credit; especially is if they are sent to collection agencies and reported to credit bureaus. Ways of beating this include setting up payment reminders and electronic billing. You can also organize for auto payments with your bank to ensure that timely payments are done.
If you live in an apartment, you might get credit for full and timely payments. You can take advantage of eRentPayment which transfers your payment reports to the three major credit bureaus; Experian, Equifax and TransUnion. This consequently improves your credit. However, your landlord needs to be registered and the lease needs to be in your name.
Limit Applications and Inquiries for New accounts
Numerous credit inquiries negatively impact your credit score. In the event that you need to make new credit applications that warrant hard inquiries, concentrate them into period of 14 days in which they will factor as one inquiry.
Once you decide to get a credit account, get all the facts right to avoid the urge to close and open others every now and then. Short credit histories with several new accounts are seen as riskier compared to a few accounts with long credit histories. When you close a credit card, you not only lower your available credit but also shorten your credit history both of which can reduce your score.
In a Nut Shell
Maintaining a good credit score in college is important if you are going to get any good deals in personal credit in the future. This requires vigilance on your part to ensure that you do not do anything that can have negative impact on it. When all is said and done, it all comes down to personal financial responsibility.
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Thieves lurk in the physical and virtual world, looking for ways to access your credit card number or commit identity theft. Whether you shop online or in brick-and-mortar stores, it’s wise to take steps to protect yourself against fraud.
Credit card companies have many tools to help combat credit card fraud, and sometimes offer additional security features to protect against identity theft.
Here are four credit cards with great security features.
1. Discover it Cash Back
Rewards: 5% cash back on up to $1,500 in quarterly rotating categories like gas stations or restaurants, 1% cash back on everything else
I just watched a documentary on the dark web, and I will never feel safe using my credit card again!
Luckily I don’t have to worry about that. I have ExtraCredit, so I get $1,000,000 ID protection and dark web scans.
I need that peace of mind in my life. What else do you get with ExtraCredit?
It’s basically everything my credit needs. I get 28 FICO® scores, rent and utility reporting, cash rewards and even a discount to one of the leaders in credit repair.
It’s settled; I’m getting ExtraCredit tonight. Totally unrelated, but any suggestions for my new fear of sharks? I watched that documentary too.
…we live in Oklahoma.
Signup Bonus: Discover will match the cash back you earn in the first year.
Annual Percentage Rate (APR): , then
Why We Picked It: Discover’s Freeze it feature gives you peace of mind if you’ve lost track of your card.
Security Features: With Freeze it, cardholders can freeze their card within seconds using Discover’s website or mobile app. This way, if you can’t locate your card, you can freeze it and look around before reporting it lost or stolen. If your card is misplaced, Discover offers free overnight card replacement. Cardholders also won’t be held liable for any unauthorized purchases.
Drawbacks: To maximize cash back, you’ll have to do the work of activating and tracking rotating purchase categories.
2. Blue Cash Everyday from American Express
Rewards: 3% cash back on up to $6,000 spent at supermarkets, 2% cash back at gas stations and select department stores, 1% cash back on everything else
Welcome Offer: $150 statement credit after spending $1,000 in the first three months of card membership
Annual Fee: $0
APR: 0% for 15 months on purchases , then 13.99%-23.99% Variable See Rates and Fees
Why We Picked It: Cardholders can control available spending for authorized users.
Security Features: If you have multiple cards for authorized users on your account, you can set a spending limit for each card’s billing period. That way, your authorized user (or a conniving friend) can’t rack up a huge balance. American Express won’t hold you accountable for any unauthorized charges.
Drawbacks: If you don’t spend a lot at supermarkets or gas stations, you may want to look for another cash back card.
3. Citi ThankYou Preferred
Rewards: Two points per dollar spent on dining and entertainment, one point per dollar spent on everything else
Signup Bonus: 15,000 bonus points when you spend $1,000 in the first three months
Annual Fee: $0
APR: 0% for 15 months on purchases and balance transfers and then 15.24% – 25.24% (Variable) ongoing APR.
Why We Picked It: Citi has an impressive range of security features that help you fight fraud and identity theft. (Full Disclosure: Citibank advertises on Credit.com, but that results in no preferential editorial treatment.)
Security Features: If your credit card is lost or stolen, Citi will send you a new card for free and provide an emergency cash advance. To protect you online, Citi can issue temporary credit card numbers for secure online purchases. Finally, if you become the victim of identity theft, a Citi specialist will help you contact TransUnion to put a fraud alert on your credit reports and help you complete a police report. Cardholders aren’t held liable for any unauthorized purchase.
Drawbacks: If you use your credit card for “meat and potatoes” spending and rarely use it on a night out, this card won’t deliver as much value.
4. Bank Americard Credit Card
Signup Bonus: None
Annual Fee: None
APR: 0% intro rate for 15 months, then variable 12.74% to 22.74%
Why We Picked It: Online shopping is safer with Bank of America’s ShopSafe service.
Security Features: With ShopSafe, you can receive temporary credit card numbers to safely shop online. If abnormal spending patterns are detected, Bank of America will block the card’s use and contact you to discuss potential fraudulent activity. You’ll never be held accountable for unauthorized transactions.
Drawbacks: This is a very basic card without any rewards to speak of.
Choosing a Card With Strong Security Features
Federal law states that you can’t be held accountable for more than $50 in unauthorized purchases if your card is stolen. But cardholders concerned with security should look for card issuers that offer zero liability for unauthorized charges.
To further protect yourself, consider cards that go above and beyond in the realm of security and protect you in areas where you may be particularly vulnerable.
If you frequently shop online, you may want a card that offers temporary credit card numbers for limited time use, which stops digital thieves from gaining access to your real card number. If you tend to misplace things and you’re scared of losing your card, you may want a card that lets you easily freeze all activity.
Of course, if your only credit card requirement is security, you should pick a card with the most enhanced protections. But if you also want a card that rewards spending with points or cash back, you’ll want to consider your spending habits and how a card can reward your purchasing behavior.
What Is Required to Get a Card With Security Protections?
Any legitimate credit card should have some security features. Cards with strong security could be available for consumers with credit ranging from poor to excellent. No matter what card you choose, you should know your credit score ahead of time to gauge your chances of approval. Before you apply, you can check two of your credit scores for free at Credit.com.
At publishing time, the Discover it, Blue Cash Everyday from American Express and Citi ThankYou Preferred credit cards are offered through Credit.com product pages, and Credit.com is compensated if our users apply and ultimately sign up for this card. However, this relationship does not result in any preferential editorial treatment. This content is not provided by the card issuer(s). Any opinions expressed are those of Credit.com alone, and have not been reviewed, approved or otherwise endorsed by the issuer(s).
Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.
Advertiser Disclosure: This post includes references to offers from our partners. We receive compensation when you click on links to those products. However, the opinions expressed here are ours alone and at no time has the editorial content been provided, reviewed, or approved by any issuer.
No one is born with perfect credit. It takes time to build a substantial credit history and even longer to achieve a credit score high enough to qualify for top-of-the-line cash-back and travel credit cards.
If you’re impatient to learn what life is like for high-rolling cardholders, consider a shortcut: convincing a friend or family member with excellent credit to add you as an authorized user to a new or existing card account.
But before you rush to convince a creditworthy friend or relative to add you to their account, take stock of the rights and responsibilities that come with authorized user status — and the potential downsides.
What Is Authorized User Status?
The rules vary by card and account type, but virtually all credit card issuers allow primary cardholders to add authorized users. In most cases, there’s no charge associated with authorized user status, although some high-end cards — mostly those with hefty annual fees for the primary user — do levy annual surcharges for each additional user.
Authorized user status allows you to accompany the primary cardholder on their credit journey, but it’s not exactly a free ride. For starters, you need to spend responsibly or jeopardize your status, which the primary cardholder can revoke at any time.
More importantly, you need to remember you’re not entirely in control of your fate. If all goes well, your authorized user account will build your credit history (or help rebuild it after bankruptcy) and could improve your credit score over time. If the primary user falls behind on their payments, however, expect something closer to the opposite.
Authorized user status has other notable benefits for primary cardholders and authorized users alike, including keeping little-used card accounts active and building credit for teens and young adults. But it also has notable risks.
Pros of Authorized User Status
With responsible use and timely payments, authorized user status help you build or rebuild credit and can improve your credit score over time. Designating an authorized user can be a boon for primary cardholders by increasing reward earnings and lowering credit utilization.
Builds the Authorized User’s Credit. The most compelling case for authorized user status is its credit-building power for people without a history of credit, such as students and young adults. Provided the issuer reports the authorized user account to the consumer credit reporting bureaus, it helps build up the user’s credit — an essential prerequisite for future loan applications.
Could Improve the Authorized User’s Credit Score. Over time, a pattern of timely repayments and responsible use (in other words, low credit utilization) can work to raise the authorized user’s existing credit score. Although the improvement is unlikely to be quick or dramatic, anything helps when you’re repairing damaged credit.
Keeps Seldom-Used Accounts Active. By adding an authorized user to a seldom-used credit card account, the primary cardholder ensures the account remains active. Each older, still-active credit card account helps keep the primary’s overall credit utilization rate low and raises their average account age. Both factors work to raise credit scores over time in the absence of negative factors like delinquencies.
Increases Reward Earnings. Two spenders are better than one — when it comes to racking up credit card rewards, at least.
Cons of Authorized User Status
Authorized user status is a potential credit risk for authorized users and primary cardholders alike. A breakdown in communication between users could have consequences for their personal relationship as well.
Potential Risks to the Authorized User’s Credit. Although the primary cardholder is ultimately responsible for making timely card payments and keeping credit utilization in check, any lapses could negatively impact the authorized user’s credit if the account displays as delinquent on the authorized user’s credit report.
Could Negatively Affect the Personal Relationship Between the Primary and Authorized User. Should the authorized user rack up more charges than the cardholders can repay on time, acrimony is all but assured. If you’re not certain you can live up to your obligations as an authorized user, think carefully before jeopardizing a close relationship.
Higher Risk of Lost or Stolen Cards. A credit card is more likely to go missing or fall into the wrong hands when it has a copy. If your authorized user card has the same number and security code as the primary card, the primary cardholder will need to cancel and reissue the card in the event of a loss.
Your Rights & Responsibilities as an Authorized User
As an authorized user, your rights and responsibilities differ from the primary account holder’s. Your role is subordinate and you lack full control over the account, so it’s a stretch to call an authorized user account “yours.” But you’re still expected to keep up your end of the bargain.
What You Can (& Should) Do as an Authorized User
As an authorized user, you’re obligated to keep your card secure and use it responsibly. Here is what you can — and should — do:
Earn Rewards on Card Spending. Authorized user spending earns rewards at the same rate as the primary cardholder’s spending. It doesn’t hurt to ask your primary if they’re willing to share the spoils with you — if you don’t already live together, that is.
Enjoy Certain Card Benefits. Authorized user cards generally carry the same benefits and privileges as primary cards. For instance, the Chase Sapphire Reserve Card’s airport lounge access benefit — one of the card’s top selling points — applies to the primary card and all authorized user cards. The exceptions to this rule are benefits awarded on a per-account basis only, as is the case with travel credits such as The Platinum Card from American Express’s $200 annual airline fee credit.
Keep Your Physical Card and Card Number Secure. Using the card is a responsibility, not a right. Treat your authorized user card and its number with the same care as you would a credit card in your own name. If you misplace an authorized user card with the same number as the primary card, the primary will need to lock the entire account and reissue the card — a major inconvenience, especially if you or they are on the road.
Avoid Overspending. Although you’re not personally responsible for the charges you make as an authorized user, overspending could strain the primary’s ability to make timely repayments. That, in turn, could negatively affect your credit down the line.
What You Can’t Do as an Authorized User
As an authorized user, you’re forbidden from making changes to the primary cardholder’s account information or payment methods. Although you have the ability to make charges on the account (unless the primary revokes this), you’re not technically responsible for them — the primary is.
Here is what you can’t do as an authorized user:
Change the Primary Cardholder’s Information. As an authorized user, you’re unlikely to be granted your own account management login, which means you can’t change any account-related information without the primary cardholder’s credentials. If the primary account holder trusts you, they could always give you the password — although for obvious reasons that’s not recommended.
Close the Account. You’re not authorized to close the entire card account.
Redeem Rewards. You can earn rewards on the account, but you can’t redeem them. That’s the primary’s benefit, although they should be happy to spread the wealth.
Directly Pay Card Balances. Without your own login for the card account, you can’t directly pay card balances. However, nothing stops you from compensating the primary cardholder for your charges.
Take Responsibility for Card Balances. As an authorized user, you’re explicitly not responsible for card balances. If the primary cardholder always pays the bill on time, this is a good thing — you get the benefits of responsible credit use without being personally liable.
Disclaim the Primary Cardholder’s Account Activity. On the other hand, you can’t disclaim the primary cardholder’s account activity. Your fates are joined. If they go on a spending spree that they can’t afford, your credit could suffer.
What You Might Want to Do as an Authorized User
Although authorized user status obligates you to none of the following moves, some or all could benefit you.
Ask the Issuer to Report Your Authorized User Account to Credit Bureaus. Most credit card issuers report authorized user accounts to consumer credit bureaus, but it doesn’t hurt to confirm with your issuer. Without such reporting, your authorized user account is useless for credit-building purposes.
Help the Primary Make Timely Payments. Although the primary cardholder is solely responsible for all card balances, nothing stops you from helping them out if they can’t make a payment on time. Faced with a choice between credit-damaging delinquency or a temporary hit to your bottom line, you should choose the latter.
Set Usage and Spending Limits. Consider working out informal usage and spending limits with your primary cardholder with the aim of keeping the account’s credit utilization below 40% or so. Higher credit utilization could be detrimental to your credit score (and the primary’s).
Apply for an Entry-Level Credit Card. Leverage your authorized user account’s credit boost to apply for a credit card of your own — probably an entry-level card like the Petal Cash Back Visa Card or a low-limit secured credit card. You don’t want to be an authorized user forever, after all.
In the early stages of your credit-building journey, one of the best moves you can make is to snag a supporting role as a credit card authorized user on a friend or family member’s account.
As long as the primary cardholder makes timely payments and you’re able to keep your own spending in check, your status as an authorized user will build your personal credit history and could increase your credit score over time.
Just be mindful of the risks — and remember that credit is a privilege, not a right.
Editorial Note: The editorial content on this page is not provided by any bank, credit card issuer, airline, or hotel chain, and has not been reviewed, approved, or otherwise endorsed by any of these entities. Opinions expressed here are the author’s alone, not those of the bank, credit card issuer, airline, or hotel chain, and have not been reviewed, approved, or otherwise endorsed by any of these entities.
Slipping up while in college is basically a rite of passage. I made so many mistakes at Indiana University – many of which I would never admit publicly – that reminiscing on my college years comes with a heavy dose of embarrassment.
Thankfully, most mistakes made while at university are temporary. They may have short-term consequences, but drinking tickets and dorm infractions don’t tend to follow you into adult life. Financial mistakes, on the other hand, can be a little stickier.
College may seem like a safe little bubble, but money is still money. The cash you blow on parties and takeout doesn’t magically get reimbursed once you earn a diploma. Beyond that, the bad habits you develop during these crucial years can haunt you for decades to come. Trust me – I’ve been there.
Here are some of the biggest mistakes I made in college, and how you can avoid them.
Not Keeping a Budget
My forays into budgeting as a college student usually fizzled out. Like a New Year’s resolution, I’d make a firm commitment and then give up after a few weeks.
When I was a second-semester senior, I decided to finally buckle down and stick to a budget. Graduation was fast approaching and I knew I hadn’t been handling my money responsibly. It was time to get serious about budgeting before I entered the real world.
At first it was really hard. I wasn’t used to depriving myself, and seeing how much I was wasting on eating out and buying new clothes was a hard pill to swallow. It wasn’t until I started my first real job after college that I finally got the hang of budgeting – but it took a lot of trial and error.
If you’re interested in starting a budget, set up a Mint account and try tracking your expenses for a few weeks. Knowing where your money is going could be enough to change your behavior and establish better spending habits.
Not Making Loan Payments While in School
Did you know you can start paying off your student loans while you’re still in school? Yeah, I didn’t either.
When I was in college, I was certain I’d find a well-paying job after graduation. My loan balance was filed under the “worry about it later” category. It wasn’t until much later that I learned a hard truth – if I had paid just $50 a month, I could have saved hundreds in accrued interest.
Start paying back those loans as soon as possible, even if you can only afford ten bucks a month. You’ll still make a dent in the total balance, and the solid repayment habits you develop in college will pay dividends when life gets crazy after graduation.
Not Researching My Student Loans
I knew while applying to college that I’d have to subsidize my tuition with student loans. Before I made my decision, my parents told me to pick an affordable school where I wouldn’t need to borrow more money than I expected to earn in my first year out of school.
I wanted to be a journalist, and the average starting salary for a reporter was around $26,000 a year. I planned to take out $24,000 total, so I felt good borrowing slightly less than my future salary.
That was the only research I did into my student loans. I didn’t examine what my monthly payments would be or what it would be like to actually live on $30,000 a year while repaying my balance.
When I graduated, I got a job making $28,000 a year and was shocked when my first student loan payment came due. The minimum payment was $350 – or 20% of my take-home pay. After rent, utilities, groceries, gas and loans, I had little left over to save for retirement, travel or spend on hobbies.
If you’re not sure how much money you’ve borrowed, it’s time to take a closer look. I had so many friends in college who had no idea how much they were taking out. A few years ago, my alma mater, Indiana University, started sending out annual letters to current students showing them how much they’d pay every month. The result? Borrowing dropped 16%.
Talk to your financial aid office about your loans and see if you can take out less next year. If you’re using loans for living expenses, consider getting a part-time job to cover those instead. The less you borrow now, the less you’ll have to repay down the line.
Succumbing to Peer Pressure
When I was in high school, I heard a lot of lectures about peer pressure. Teachers told us not to do things just because the “cool kids” were doing it. They’d tell us to avoid alcohol and drugs and stick to our own values.
Unfortunately, no one explained how your peers could pressure you to spend more money. I can recount dozens of instances where I didn’t want to go out for dinner or go shopping, but gave in because my friends were doing it.
It’s so tempting to live the good life in college, putting off the stress of adult life until after graduation, but it’s also important to learn how to say no and think about long-term consequences. You can always strike a balance between having fun and staying on top of your responsibilities.
Not Applying for More Scholarships
Students usually assume the only time to apply for scholarships is before they start college. The thing is, there are plenty of scholarships available for current students. While I applied for a couple scholarships during my time in school, I didn’t take the applications seriously.
I told myself applying for scholarships was a waste of time. “What’s the point,” I’d think. “I probably won’t get it.”
That line of thinking probably cost me thousands of dollars, and it wasn’t until I was repaying my loans that I realized how much money I’d left on the table. If it seems like a hassle to apply for a $500 scholarship, consider how long it would take you to earn that amount in the real world.
One of the biggest mistakes a college student can do is not track their credit history. A credit report is like a financial grade that lenders, landlords and sometimes even employers use to gauge your creditworthiness. If you have a low credit score or no credit, you probably won’t qualify for an apartment by yourself and will need a cosigner.
Thankfully, I didn’t have to worry too much about my credit while I was in college. My parents made me an authorized user on their credit cards, so while I was attending class and partying on the weekends my credit history was slowly growing.
If you don’t have a credit card right now, and you think your parents could be in a position to help, ask your parents if you can become an authorized user on their card or ask them to cosign on a student credit card.
Using a credit card to improve your credit history is simple if you have great self control. Pay a couple small bills with your card every month and then pay the balance in full once the monthly statement posts. Doing so regularly can give you a huge leg up after graduation.
But do remember a credit limit is not “free money” and should be looked at as a tool for your financial health. A credit card only has benefits if you pay it off in full every month, carrying over debt could be problematic for your financial future.
This blog post does not constitute, and should not be considered a substitute for legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.
When it comes to shopping around for car insurance, it can be difficult to figure out the pricing structure. Part of the issue is that the price varies significantly by where you live, the minimum coverage requirements and a number of other factors.
Your auto policy and the premium will also depend on such factors as age; car year, make and model; driving record; location; and gender, which we get into more later.
The average cost of car insurance in the United States is $1,758 per year, which works out to about $146.50 per month. In Florida, the average monthly cost is 29% higher than the national average. A car insurance policy in Alaska, on the other hand, will cost you much less on average, at just $77.88 per month. Even ZIP codes in the same town can differ.
This means that your insurance premium and the premium of your friend living across town will likely be quite different.
With all those factors, how do you know what to expect when it comes to the cost of auto insurance? Well, we’ve got your back. We’ll go into how much auto insurance costs by state and by insurance provider, dive into the other factors, and talk about what you can do to save money on auto insurance.
The Simple Dollar analyzed millions of car insurance rates in every U.S. ZIP code to determine the average cost by state, carrier, coverage amount, credit score, and other factors from Coverage.com.This includes analyzing thousands of rates from all 50 states that were publicly sourced from 2019 insurer filings. Rates are based on a 30-year-old male or female that had a clean driving record, and we looked at those who had both good and poor credit. These rates should be used to inform your car insurance shopping process, but your own quote may differ based on your unique driving profile.
In this article
What decides the cost of auto insurance?
Here, we’ll get into details about factors that decide the cost of your car insurance. They can be:
Where you live
The car you drive
Your driving history
How long you’ve been driving
Your credit score
Your driving habits
The amount of coverage you choose
The type of coverage you choose
[Read: The Simple Guide to Car Insurance]
1. Why does where I live affect the cost of car insurance?
Car insurance rates vary dramatically by state and even ZIP code.
Let’s look at Louisiana. That state offers the most expensive rates for full coverage, with an average annual rate of $3,279.18. One of the reasons why car insurance is so expensive in Louisiana is because the state has one of the highest accident rates. The number of fatal accidents and frequency of collisions in the state is significantly higher than the national average, which leads to higher auto insurance rates.
State car insurance rates are also determined by the number of uninsured drivers on the road. This leads Florida to be the most expensive state for minimal coverage — 26.7% of drivers don’t have car insurance. Uninsured drivers create more risk and ultimately increase the price of insurance for everyone.
Most expensive full and minimum coverage costs per state
State (Full coverage cost)
Average Full Coverage Cost
Average Full Coverage Monthly Cost
State (Minimum coverage cost)
Average Min. Coverage Cost
Average Min. Coverage Monthly Cost
5. New York
5. Rhode Island
7. New Jersey
7. New York
8. New Jersey
9. Rhode Island
Which states have the cheapest car insurance?
At an average premium of just over $300 each year, Iowa drivers pay the least amount for minimal coverage –– by a significant amount. Iowa’s low population density is one of the main reasons costs are so low. The majority of the state is made up of “dense rural” areas, rather than urban areas. With fewer drivers on the road, there is less risk of accidents overall.
Cheapest full and minimum coverage cost per state
State (Full coverage rank)
Average Full Coverage Cost
Average Full Coverage Monthly Cost
State (Minimum Coverage rank)
Average Min. Coverage Cost
Average Min. Coverage Monthly Cost
2. South Dakota
3. North Dakota
8. North Carolina
9. North Dakota
10. New Hampshire
10. North Carolina
2. What are my choices of insurance coverage and which are more expensive?
Though every state sets its own regulations, there is a minimum amount of insurance you must carry in each of the 48 states that require car insurance. (New Hampshire and Virginia don’t require insurance.) You can choose to carry higher limits, which will result in a higher premium.
What type of auto insurance coverage should I choose?
You can also choose to add collision and/or comprehensive coverage to your policy to create “full coverage.” While minimum coverage only protects you against liability claims from others, full coverage also protects your vehicle. Collision coverage, as the name suggests, protects your vehicle when it collides with another vehicle, building or other objects. Comprehensive coverage protects your vehicle in non-collision incidents, such as theft or a natural disaster.
Not everyone needs full coverage. Here are some things to consider if full coverage is right for you:
Older vehicles may not need full coverage since the deductible could be higher than the value of the car.
Full coverage may not be worth it if you rarely drive and have little to no history of accidents.
If you have a lease or a car loan, check with your lender. You may be required to maintain full coverage.
Your policy limits and deductible will fine-tune your car insurance costs, whether you choose minimum or full coverage. The policy limits are how much the insurance company will pay for each type of incident. The deductible is how much you are responsible for paying before the insurance company starts to pay.
Should I choose minimum coverage vs. full coverage?
Minimum coverage car insurance differs in every state, but it usually includes: bodily injury, liability coverage and property damage liability coverage at a minimum. This is the cheapest coverage you can buy, and you can’t legally carry less than the minimum amount.
Full coverage car insurance, on the other hand, is more expensive because it offers significantly more protection. However, it’s worth the added cost. If you settle for the state’s minimum insurance requirements, you run the risk of being underinsured.
Full coverage car insurance, on the other hand, is more expensive because it offers significantly more protection. However, it’s worth the added cost. If you settle for the state’s minimum insurance requirements, you run the risk of being underinsured.
Full coverage car insurance usually includes:
You will see coverage amounts listed as three numbers separated by slashes, such as 30/50/30. These numbers represent, in order, bodily injury liability per person, bodily injury liability per accident and property damage liability per accident, in thousands of dollars. So 30/50/30 insurance covers $30,000 of bodily injury per person, $50,000 of bodily injury per accident and $30,000 of property damage per accident.
Drivers can also elect to purchase additional coverage for things like roadside assistance, rental car reimbursement and accident forgiveness.
If you get into a costly accident, there’s no guarantee that you’ll have enough coverage to pay for the full extent of the damages. In that case, you would be financially responsible for paying the difference, which would come out-of-pocket.
3. Can my credit score impact the cost of car insurance?
Your credit score can have a massive impact on your car insurance rates, regardless of other factors. Only three states — California, Hawaii and Massachusetts — ban insurers from factoring in credit score, while in many states your rates could more than double if your credit is poor.
Car insurance cost: poor credit vs. good credit
Good Credit Full Coverage Average Cost
Poor Credit Full Coverage Average Cost
Need to boost your credit score and improve your car insurance rates?
Become an authorized user on someone else’s credit card (if they have good credit).
Pay down at least one balance or request a limit increase. Either will give you points for having more available credit.
4. Do my age and gender affect the cost of auto insurance?
In a word, yes. Even your basic demographics can have a strong impact on your car insurance costs. Most (though not all) states allow drivers to be rated based on:
Age: Younger drivers and those over the age of 75 generally pay more.
Gender: Among drivers under age 25, men typically pay more than women — this discrepancy tends to go away for more experienced drivers.
Marital status: Married people are considered lower risk, and thus tend to pay less for car insurance.
5. Can my type of car affect the cost of my insurance?
Which car you choose can have a surprisingly big effect on your insurance rates.
Less expensive to insure
Family vehicles such as SUVs or sedans
More expensive to insure
Sports cars, especially those that are considered high-performance
6. How can my driving history affect the cost of auto insurance?
As you might expect, insurance companies don’t particularly like paying claims. So if your driving history is poor, you can expect higher premiums. In order of costliness, some things that could raise your rates include:
7. Do auto insurance companies care about my driving habits?
Statistically, the more you drive, the more likely you are to get into an accident. Likewise, parking on the street is more likely to result in damage than parking in your own garage. To save money on car insurance, consider:
Taking public transportation to work
Reducing your commute
Paying for off-street parking
8. How does the car insurance company I choose affect my cost of auto insurance?
Of course, all insurance carriers are free to set their own prices. Some carriers offer discounts for which you might qualify, such as safe driving bonuses or discounts for military families, and some may rate your particular risk level lower than others. So it always pays to shop around.
As you can see below, most major car insurance providers are in the same ballpark for rates, but there are some clear outliers. You’ll get the most expensive full coverage auto insurance premium from Allstate, and the most affordable from USAA.
On the opposite end of the spectrum, Travelers offered the most expensive minimum coverage rate of $815.41, and USAA offers the cheapest rate by far – just $487.04 each year. This makes USAA seem like the obvious choice, but USAA doesn’t provide coverage to just anyone — it has strict military and immediate family restrictions.
Full Coverage Average Cost
Full Coverage Monthly Cost
Minimum Coverage Average Cost
Minimum Coverage Monthly Cost
How can I save on car insurance?
There are a few tricks for saving on auto insurance, including lowering the amount you drive, improving your credit score, and of course, driving more safely. You can also get a host of discounts, depending on your choice in insurance provider.
To get the best deal for your circumstances, conduct a car insurance comparison.
Different insurers offer different discounts. Insurers like Geico, State Farm and Progressive are frequently recognized for having cheaper car insurance rates.
Common discounts include:
Good student savings
Certain organization membership
Active duty military
Bundling other policies with the same company
Driving a low-risk car
Having a good credit score
Boost your credit score
Taking the steps to improve your credit score is another way to save money on your car insurance. As an added bonus, it will help reduce costs in other areas like credit card APRs. Start by paying all of your bills on time, checking your credit report for errors and paying down high interest debt. Remember, improving your credit score is a marathon, not a sprint. It will take some time to see your score increase.
[Read: Car Insurance Rates Are Up – Here Are Eight Ways to Get Yours Back Down]
Car insurance cost FAQs
It varies by state, but in general, you can expect to need coverage for bodily injury liability, property damage liability and uninsured/underinsured motorist protection. States like New Hampshire don’t require car insurance, though additional requirements are in place.
It depends on a few factors. You should consider the likelihood of your car being damaged (based on your area, your vehicle’s age and similar factors) and your ability to pay for repairs if damages were to occur. Also think about how often you drive. From the start, driving more will put you at a higher risk for an accident.
After an at-fault accident, you can expect to see a 42% rise in your premium, according to data from InsuranceQuotes and Quadrant Information Services. Unfortunately, these rates were measured from people with relatively clean driving histories. If you have a less-than-perfect record, you may be subject to even higher premium increases. How much your rate will increase will depend on the claim type, if you were at fault, your carrier and what state the accident took place in.
Too long, didn’t read?
How much you’ll pay depends on a number of factors and will vary by company. But that doesn’t mean your rate is entirely out of your control. While there are factors you can’t easily change –– your age and where you live, there are still some things you can do to find savings.
We welcome your feedback on this article and would love to hear about your experience with the car insurance we recommend. Contact us at firstname.lastname@example.org with comments or questions.
Too much financial advice is about pulling yourself up out of hardship.
I’m glad it exists; people in a money hole need a way out. But wouldn’t you love to skip the hole-digging and get right to the having your life together part?
Your early 20s is a key place to set a financial foundation. You can quickly erode your financial health with unmanageable debt and expenses, or you can build a solid safety net and a plan that helps you weather this transitional period and come out on the other side on solid ground.
Hint: Choose the latter.
Here are five things to know about your money by the time you leave college to set yourself up for a solid financial future.
5 Things to Know About Your Money After College
Figure out the answers to these questions now to set yourself up for financial success for years to come.
1. What’s Your Credit Score?
This sounds like a dreadfully boring place to start, but it’s key to making a solid financial plan. Understanding your credit history and the factors that make up your credit score give you a solid financial picture you can build from.
You can get a free credit report directly from a credit bureau, but that won’t include your score. Instead, I recommend a tool that shows you your credit score and the elements of your credit history that affect it.
Among other information, these tools will let you see:
Your FICO score or VantageScore. Each of these types of credit scores can be useful. They’re different, though, so make sure you know which one you’re looking at and how it compares to what creditors and lenders will see.
A breakdown of your debts. Any credit cards, auto loans, personal loans and student loans in your name will show up, including how much you owe and which company you owe it to.
Payment history. You’ll see if you have any outstanding negative marks, like unpaid bills. You can use this information to pay them off and clean up your credit or, if they’re old, wait for them to fall off after seven years.
Word of warning: These tools earn money by recommending products like loans and credit cards. Their recommendations can be useful to help you save money and improve your credit — but first make a plan and shop around. You might find better options on your own.
You might learn that you have no credit score, which is also useful information. It means you haven’t borrowed or used credit cards long enough to generate a credit history.
If that’s the case, choose one of these steps to start building credit:
Become an authorized user on someone else’s credit card — like your parents or another family member.
Open a secured credit card with a deposit and low credit limit.
Take a credit builder loan.
Open a store credit card — but don’t use it too much.
Finance a big purchase, like furniture or appliances, with the store.
Use a cosigner for a credit card or small loan.
Use a service that reports your rent payments to credit bureaus.
Act now: Check your credit score and report details for free through a tool like Credit Karma or Credit Sesame.
2. How Do You Make a Budget?
This is so basic you might overlook it: You have to know how much you spend each month versus how much you earn.
Making and following a budget can be especially tricky during a transition period, like starting a new job or moving. Right after college, you might not have a stable monthly income, and a lot of budgeting advice probably doesn’t feel like it applies to you.
But you should figure out how to make a budget that works for you.
My favorite is envelope budgeting, because it lets you plan for your necessary expenses, debt repayment and savings, and then lets you do what you want with whatever’s leftover. So you don’t have to keep a detailed log of every burrito you buy.
You can use actual paper envelopes if you deal with a lot of actual paper cash — or you can make a digital envelope budget using an app or bank account that includes the feature, like Qapital or Qube.
Or you could simply create a spreadsheet budget and set a weekly money date for yourself (and your partner, family or housemates) to log spending and income and make a plan for the following week.
However you prefer to set it up, a budget should help you see in one place:
Income. If you have a set salary, you can plan ahead for your after-tax monthly take-home pay. If you have an irregular income, creating a budget to track it can help you find a three-month or 12-month average you can use to plan ahead.
Expenses. Tracking your recurring expenses, like housing, bills and food, lets you see how the amount compares with your income and could help you spot places to cut back. For example, your housing shouldn’t cost more than 30% of your income, and there are tons of ways to keep your utility bills down.
Spending. This is what typical budgeting apps show you: Where your money goes day to day. These are your everyday transactions, like eating out, shopping or entertainment. Track this at least when you first start budgeting to spot any trends and places you can cut back when money’s tight.
Debt. Minimum loan and credit card payments fall into your expenses, because those are necessary monthly bills. Adding debt-specific categories gives you a productive place to funnel extra money each month, so you can pay debts down faster.
Savings. Don’t forget to budget for saving money after college! If you build savings in around your income and expenses, it’s easy to find room to set a little aside each month.
Act now: Create a simple spreadsheet or download a budgeting app to keep track of your money.
3. How Will You Pay off Debt?
Getting your credit score and report details will help you see how much debt you’re dealing with and who you owe money to.
That means you can make a plan.
Your plan depends on how much debt you have and how much extra money you have to work with each month, so there’s no best plan for everyone and your plan might change as your income changes.
The debt snowball method is a smart plan if you’ve got multiple accounts to pay off with limited income. It eliminates the overwhelm of debt payoff by letting you focus on one debt at a time with however much money you can afford to allocate to it.
If you have federal student loan debt, look into your repayment options. By default, you signed up for a 10-year standard repayment plan, and that might make monthly payments tough to handle. An income-driven repayment plan could help.
Private debts and even credit cards might have more repayment flexibility than you think, too. You might be able to:
Refinance private student loans to get a lower interest rate.
Ask for a deferment or forbearance period due to economic hardship.
File for bankruptcy to wipe out most of your debts.
Negotiate a payoff amount, especially for debt in collections.
Negotiate a payment plan that’s easier for you to keep up with.
Act now: Prioritize your outstanding debts in a way that makes sense for you — by interest rates or balances. Use your monthly budget to see how repayment fits in.
4. What’s Your Long-Term Savings Plan?
You’re probably just getting started in the workforce, so I’m sorry to bring this up, but… retirement.
I know: OK, boomer. It’s far off. It doesn’t matter. You’ll probably work forever.
I’m not asking you to pick out your condo in the Florida Keys. Just add a retirement savings bucket to your budget, and thank your wise young self later.
Here’s why: The earlier you start saving for retirement, the easier it is — and the more you can get for free. Retirement savings accounts are invested into the stock market, with interest earned going back into the account to earn more interest — i.e. compound interest.
Because of compound interest, you only have to save a little bit each month if you start now, and it’ll likely grow to quite a lot by the time you retire… or start your third act or whatever knowledge workers do in their 60s.
Act now: Set up paycheck contributions if your employer offers a 401(k). If not, set up an IRA on your own, and contribute anything. The rule of thumb is to save 10% to 20% of your income for retirement, but save less if it’s all you can afford — it’ll pay off in interest later.
5. Do You Have an Emergency Fund?
One of the best things you can do for your financial health and security — even when you’re on a tight budget — is build an emergency fund.
When money’s tight, it can be tough to set some aside for a rainy day, but won’t you be glad you did? (I’ve been there, and the answer is definitively: YES.)
Don’t be intimidated by recommendations that an emergency fund needs to cover six months’ salary. If I were you, that would keep me from ever starting one in the first place.
Instead, just set aside money as you can.
A few hundred or a few thousand dollars might not pay your rent for six months, but it could keep your budget intact when you get an unexpected electric bill. Those small moments can make or break your financial health, so find tiny ways to always be prepared.
Savings apps can help you save money without even noticing — by taking a little out of each paycheck, rounding up purchases to stash “digital change” or secreting away bucks from your bank account.
Once you have an emergency fund you’re comfortable with, start saving for other short-term goals, too.
You might want to make a down payment on a car or a house, take a vacation, get married or upgrade your living room furniture. Whatever it is, saving ahead in small increments helps you spread the expense across several months so you don’t feel the hit to your budget all at once.
Act now: Add a savings “envelope” or bucket to your budget, and start funneling money into it regularly.
Build a Solid Financial Foundation
As you embark on adulthood, enter new jobs and move into new cities, you’re going to be bombarded with advice to optimize your finances — investing this, credit card rewards that.
This advice is fine, but you need a solid foundation first.
Quiet the noise, and make sure you have these five pillars in place to stabilize your finances before you start gambling on crypto and travel points.
Dana Sitar (@danasitar) has been writing and editing since 2011, covering personal finance, careers and digital media.
American Express is offering 20,000 Membership Rewards points when you add an authorized user and they spend $2,000 within six months
There is also another offer but for only 5,000 Membership Rewards, but can add up to 4 users for a total of 20,000 points. Potential link here.
The Fine Print
Valid until September 7, 2021
What You Should Know
If you aren’t targeted, call American Express to see if they can add the offer to your account. This is usually possible. At the moment the direct links don’t seem to be working either, so calling in regardless of whether you received an e-mail or not seems like it’s required.
SSN is not required when you add an authorized user, but you need to provide one within 60 days of account opening (people have been denied the bonus in the past for not providing this in time)
American Express authorized user accounts do count towards your Chase 5/24 status/total.
Does being added as an authorized user prevent you from getting the sign up bonus?
No, you can be added as an authorized and then sign up for the card as the primary cardholder and still receive the sign up bonus.
Who needs to spend the money to trigger the bonus?
Authorized user needs to complete the spend requirement. Keep in mind authorized users have their own unique card number so this is easy to track. It’s highly unlikely that spend completed by the primary cardholder will trigger the bonus.
Very nice deal if targeted, normally the bonuses are for 2,500 or 5,000 but with lower spend requirements. Interesting that American Express has upped this offer and also the pay over time offer. Adding a Platinum authorized user will cost $175, but Platinum cardholders can also add a ‘gold’ authorized user for free.