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How Do Add-on Credit Cards Work? 

04 April 2022
4 minutes

Add-on credit cards are a means for credit cardholders to extend their credit facility to family members. It could be because they may not be credit-worthy because of their age or income. 

This article will offer you everything you need to know about add-on credit cards so that you can decide if they actually work for you. 

What is an add-on credit card?

A little background first. In order to get a credit card, the applicant needs to be credit-worthy. This means that they should have a good credit score. This in turn emerges from flawless credit history and a steady income above a certain level. As a result, credit card applicants who are still studying (or still to secure their first paying job) could often be ineligible. 

Similarly, you might have a spouse who has been looking after the home or running a small business sporadically. She/he might not have the necessary income proof. The same might be the case for aged parents. 

Enter add-on credit cards. They come to your rescue when you want to give family members access to credit even when they may not be eligible for credit as per the bank’s eligibility criteria. Add-on credit cards are linked to your credit card and your bank account. 

You can get several add-on credit cards that ride on your primary card. A separate fee is charged per add-on card. The primary card’s features, benefits and credit limit are typically given to the add-on cards as well. 

How to get an add-on credit card?

Usually, you can get add on cards issued by your bank through a simple process of filling up a form and attaching a few documents. You need to submit proof that the add-on card applicants are over 18 years old. Most banks allow you to download the form on their website and you might even be able to apply online. 

Advantages of add-on credit cards

  • Convenience

Add-on cards allow the primary cardholder to share financial freedom with a family member. The add-on cardholder need not wait for the primary cardholder (or their card) to be present and need not call them for OTPs that enable transactions. They can transact conveniently and without any hindrance. 

  • Multiply your rewards

Since spending on the card is likely to multiply in alignment with the number of cardholders, you better your chances of reaching spending milestones quicker and might therefore access rewards more quickly. 

  • Multiply your points

Similarly, all points accumulated on the add-on cards are credited to a single account. This means that you end up gathering a higher number of loyalty points, which again translates to higher rewards. 

The downside of add-on credit cards

  • Impact on credit score 

If your teenagers are using and abusing your credit cards, resulting in a higher monthly credit card bill than you can afford to pay, it could impact your credit score negatively. 

  • Additional fees and charges

You have to pay additional fees per card and this amount in itself might add up to a fair bit cumulatively. 

Read about General Credit Card Fees

  • Availability

For the most part, the add-on credit cards facility is usually only available on premium cards, which means that you need to pay a high amount of charges for the primary card itself. 

Precaution to note 

  • Develop your own eligibility criteria

The bank has already deemed your loved one as ineligible for credit. Why not evaluate their creditworthiness yourself. Are they responsible spenders? Do they promptly return funds borrowed? 

If you are talking about a teen who frequently burns through their monthly allowance; And always needs to ask for an advance (which they later deny ever taking), maybe you should think twice before you put credit score in their hands. 

  • Credit understanding

Although this might be true for anyone, make sure that your family understand the implications and seriousness of credit card access. These include credit card details, fraud, phishing, and other vulnerabilities that come with easy access to funds.

Ensure that every add-on cardholder understands the seriousness of overspending. Do not mince words when you are detailing what causes a low credit score and how it inhibits future access to credit. Hold a little family quiz. This is to make sure that everyone displays a thorough understanding before you start handing out cards indiscriminately. 

  • Use pre-set limits

Don’t be feeling shy or awkward setting limits for the add-on cards, especially if you are giving cards to shopaholics or big spenders. This is your hard-earned money and you are within your rights to safeguard it. In fact, it is in your family’s best interest for you to ensure creditworthiness because you never know when a new line of credit (or an urgent big-ticket loan) requirement arise. Explain this – feel free to quote us or use our words. 

The takeaway

Some banks offer add-on credit cards for free but this is only on certain premium cards. However, credit responsibility, understanding, and awareness should be a precursor to becoming an add-on cardholder. Be cautious when sharing access to your credit. All said and done, responsible add-on cardholders can help you make better use of your card and help access rewards quickly. 

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