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A credit card annual fee is a recurring cost assessed by an issuer to maintain an active account. It is essentially a membership fee that helps card companies fund high-end rewards, exclusive perks, and administrative services

While there are plenty of credit cards on the market that don’t come with an annual fee, the credit cards that charge an annual fee may have specific cardholder perks that can outweigh the cost of the fee for some users.

Below, we take a closer look at how annual fees work, what they typically cost, and some simple ways you might be able to avoid paying them altogether.

What Is a Credit Card Annual Fee?

A credit card annual fee is a yearly, recurring charge levied by card issuers to maintain a card account, often unlocking premium rewards and perks. Annual fees for credit cards can range anywhere from $95 up to $695 or more for premium cards. These fees help issuers pay for high-value rewards, such as cash back, access to airport lounges, travel credits, specialized insurance, and lucrative sign-up bonuses.

An annual fee may be worth it if the card’s rewards and benefits exceed the cost of the fee. However, there are numerous credit cards on that market that offer rewards — including cash back, points, miles — and other benefits that do not charge annual fees.

How Do Credit Card Annual Fees Work?

The first fee is typically billed on your first monthly statement after opening the account. Subsequent fees are generally charged as a lump sum once every 12 months, usually during your account anniversary month. Some issuers will break the fee into smaller monthly installments, though this is not common.

You pay your credit card annual fee just like you’d pay any other credit card charges listed on your monthly statement.

Which Credit Cards Typically Have an Annual Fee?

There are three main types of annual fee credit cards:

Reward Cards

Credit cards that offer a high-value rewards structure or that have a strong introductory bonus often come with an annual fee. If the card is used strategically, it’s possible to earn enough credit card rewards to cancel out the cost of the annual fee. You may earn rewards like cash back, travel points, or discounts on specialty purchases.

Premium Travel Credit Cards

A premium card that offers luxe perks like free passes to airport lounges or a travel concierge is likely to charge an annual fee to use the card. If you’re considering one of these cards, you’ll want to crunch the numbers to make sure you’ll use enough of the perks to offset the cost of the annual fee.

Secured Credit Cards

A secured credit card is designed to help consumers with poor or limited credit build their credit file. These cards require a deposit to “secure” the card, and that amount also usually serves as the card’s credit limit. On top of the deposit, some secured credit cards charge an annual fee. However, many major card issuers offer secured cards without an annual fee, so it’s a good idea to shop around.

Recommended: What Is the Average Credit Card Limit?

How Are Credit Card Annual Fees Charged?

As mentioned, card issuers typically bill the annual fee once a year, starting the first month you own the card. So if you opened a card on February 10, 2026, you can expect to receive a bill for the annual fee on your February 2026 statement and every upcoming February statement after that.

The annual fee shows up on the credit card statement alongside other credit card charges, and you pay the annual fee as part of that month’s credit card bill. Remember that even if you have an authorized user on a credit card, it’s still the primary cardholder’s responsibility to make payments, which includes any fees.

Avoiding Credit Card Annual Fees

One of the best ways to avoid an annual fee is to select a card that never charges one. If you have your heart set on a premium card that charges a hefty fee, you might look for a “first year waived” offer, where the issuer waives the annual fee for the first 12 months as a sign-up incentive. However, you’ll be on the hook for the fee for subsequent years.

If you already have a card that charges an annual fee, you may be able to avoid paying it with these strategies:

•   Request a retention offer: It may be worth calling the number on the back of your card and mentioning that you are considering canceling because of the fee. Issuers may offer a statement credit to cover the fee or bonus points to offset its cost.

•   Downgrade your card: Alternatively, you might ask your issuer if you can switch your account to a no-fee version within the same card family. This should allow you to keep your credit line and account age intact, which protects your credit.

•   Cancel the card: If you cannot get a waiver or downgrade, you can close the account. However, this should be seen as a last resort. Closing an account can reduce your total available credit, raise your credit utilization ratio, and potentially shorten your average account age, all of which may negatively impact your credit profile. That said, if the card has an annual fee and not enough perks to make it worth paying, it may still make sense to close it.

The Takeaway

Many credit cards charge an annual fee to fund premium rewards and high-value travel perks. While it’s easy to find excellent credit cards with no annual fee, a card that charges one may be worth the cost if you use its benefits and rewards enough to offset the fee.

Before opening an account with an annual fee, it’s a good idea to calculate whether the perks align with your spending habits and if you’ll gain more in value than you pay out. If you already have one, remember you can often request a retention offer or downgrade the card to a no-fee option to avoid paying the yearly charge.

Looking for a new credit card? Consider credit card options that can make your money work for you. See if you're prequalified for a SoFi Credit Card.

FAQ

How do you pay the annual fee on your credit card?

A credit card annual fee is paid just like any other charge on your monthly statement. The fee is typically billed as a lump sum once a year, usually on your account anniversary month, and appears alongside your purchases and interest charges. You must pay the annual fee by the due date to keep your account in good standing.

How can I avoid paying annual fees on my credit card?

There are several ways to avoid paying an annual fee. The simplest is to choose a credit card that does not charge one. If you have your eye on a premium card, look for sign-up offers where the issuer waives the annual fee for the first year. If you already have a card with a fee, you can try calling the issuer to request a retention offer, such as a statement credit or bonus points. Alternatively, you can ask to downgrade your account to a no-fee card option within the same card family. Canceling the card is a last resort, as it can potentially harm your credit.

Do all credit cards have annual fees?

No, not all credit cards have annual fees. Many excellent credit cards, including those offering cash back and rewards, do not charge a yearly fee. Annual fees are typically associated with premium cards that offer high-value perks, such as extensive travel benefits or high-end rewards programs. Whether a card with an annual fee is worth it depends on if the value of the benefits you use outweighs the cost of the fee.

Photo credit: iStock/Rudzhan Nagiev

SoFi Credit Cards are issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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A rewards credit card allows cardholders to earn incentives for purchases they make. The potential benefits of these cards include travel miles, points, and cash back, but maximizing rewards requires determining which rewards credit card is best for you.

Read on to learn more about how these cards work and how to choose a rewards credit card that suits your spending habits.

What Is a Rewards Credit Card?

A rewards credit card offers cardholders bonuses based on their spending. Bonuses can come in many forms, including airline miles, cash back, and points.

The benefits of a rewards credit card will vary based on the card type. For instance, one cash-back credit card may offer a flat percentage back on all purchases, while another may offer higher percentages back in certain categories, such as gas or groceries, and a lower rate across other areas.

Other rewards credit cards could offer cardholders one or two points for every dollar they spend using the card, which they could then redeem for airline tickets or hotel stays.

Recommended: What Is the Average Credit Card Limit?

How Rewards Credit Cards Work

Rewards credit cards operate like traditional credit cards, but with the bonus of rewards earned based on spending.

The cards offer access to a revolving line of credit that cardholders can use to make purchases. When the cardholder makes a payment by their credit card due date, their revolving credit is restored for the amount of their payment.

Where rewards credit cards differ from other types of credit cards is that a portion of each purchase goes toward the card’s designated bonus, whether that’s cash-back rewards or points to use for a flight or hotel stay. Card issuers pay out rewards on a specific term, such as by billing period, on a monthly cycle, or based on spending. Once the rewards hit the user’s account, the user can redeem them.

There are a number of ways that cardholders can redeem the credit card rewards they earn. This could include as a statement credit for merchandise or gift cards, stays at hotels and resorts, toward airline tickets, as a direct deposit to a bank account, or in the form of a check mailed to the cardholder.

Types of Credit Card Rewards Programs

Rewards credit cards break down into six broad categories based on the earning and redemption processes.

Cash Back

With cash-back rewards cards, users get a percentage of “cash back” on every purchase made with their card. Cash-back rewards rates are typically around 1% to 2% of every purchase, but some cards may offer higher returns based on the spending category.

Cardholders can redeem cash-back rewards in several ways, including:

•   A credit against the card’s balance

•   Gift cards from select retailers

•   Donations to charity

•   A check sent by mail or direct deposit

Travel Rewards

Credit card issuers also offer general travel purpose reward cards, where cardholders can earn points or miles through their spending that they can then put toward all manner of travel expenses. This could include everything from car rentals to hotels to flights, effectively allowing the cardholder to use credit card rewards to travel for less.

Typically, general purpose travel cards offer points or miles on any purchase, often at a rate of 1 or 2 miles or points per dollar spent. However, some cards may offer 2x or 3x points on specific spending categories, such as dining out or travel.

With general purpose travel cards, users can typically redeem points through the issuer’s booking platform or transfer the value to a partner. Unlike co-branded cards that may restrict where cardholders can redeem their points, general travel cards usually allow redemption at a variety of airlines or hotels.

Points

Credit cards that offer rewards points can provide access to a variety of rewards, including options for cash back or travel redemption. Generally, a base rate of 1 point per dollar spent is offered.

However, the value of points can vary depending on the card issuer and how the cardholder redeems their points. Reward point cards could be redeemed for gift cards, travel, donations, or cash, depending on the issuer.

Gas

Gas cards help users save money on filling up the tank. Typically, these cards only offer rewards or redemptions for purchasing gas at a gas station. A cardholder could redeem their rewards as a statement credit or a discount at the pump.

Hotel or Airline

Hotel and airline-branded credit cards reward users when they spend with a particular company. For instance, booking nights at the same hotel brand could earn a cardholder points, bumping up their status, or give them access to room upgrades or a free night’s stay.

Similarly, airline credit cards reward users for traveling on their airline. They also can include opportunities for status upgrades, and being a loyal airline traveler could lead to receiving perks like lounge access in the airport or free bag check.

Retail

Retail credit cards is a broad designation that encompasses any credit card reward tied to a specific retailer or store. Rewards vary based on the card issuer and the store. However, they might include point-of-sale discounts with every purchase or the chance to earn points to use toward discounts and gift cards at the store.

Factors to Consider When Comparing Rewards Credit Cards

There’s a wide range of reward programs to take advantage of, and the policies of these programs vary from credit card issuer to issuer. This is why it’s important to take the time to compare rewards credit cards. Before applying for any rewards card, it’s worth looking at each of the following factors.

Annual Fees

Some rewards credit cards include an annual fee. This fee could be as low as $50, while other cards’ annual fees may soar into the thousands of dollars a year for super premium cards.

It’s important to consider whether the rewards you earn from the card will offset the cost of a credit card’s annual fee. Depending on how often someone uses the card, and how frequently they redeem rewards, they may determine that the fee is worth it.

Additionally, it’s worth looking into whether the card offers a lucrative sign-up bonus offer that essentially cancels out the annual fee, at least for the first year.

Interest Rates

Interest rate, or annual percentage rate (APR), is the amount of interest a person will pay on the money they borrow from the credit card issuer. If the credit card holder carries a balance month to month, they may owe interest charges on their outstanding balance.

As of early February 2026, the average credit card APR is around 25.35%, though APRs on rewards cards may be higher. A high APR on a credit card could translate to steep interest charges if the cardholder carries a balance. As such, keep an eye on the interest rate when comparing cards.

Tiered vs Fixed Rewards

Tiered vs. fixed refers to the way the card structures its rewards, which is another important consideration to keep in mind.

With tiered rewards, a credit card offers different points or values based on the category of purchase. For example, a travel card may offer more points for a travel-related purchase as opposed to groceries.

Fixed rewards, on the other hand, offer the same rate for every purchase. An example of this is a cash-back rewards card that gives cardholders 2% cash back on every purchase, no matter the spending category.

The type of rewards structure that’s right for you will depend on your spending habits. If you know you spend mostly in one category, you could find that a tiered rewards card that prioritizes that category is the right fit. But if your spending doesn’t align with the highest rewards categories, fixed rewards may pay off more.

Cash-back Rewards Caps

When researching cash-back rewards cards, keep an eye on the fine print around rewards caps. Some cards may cap redemption after a certain amount of spending.

For example, a card may offer 3% cash back on purchases up to a certain dollar value, then only offer 1% once the cardholder hits that amount.

If you’re choosing between two cards, the one with the higher cap — or better yet, no cap at all — could help you determine which one is the better option.

Guide to Choosing the Best Rewards Credit Card for You

Now that you know about the different types of rewards cards, think about your financial situation as you choose a card. That includes:

Analyzing Your Spending Habits

What a person spends the most on and where they spend it will impact which rewards card is the best fit for them.

Here’s an example of how that might play out in the decision between credit card miles or cash-back rewards. If someone prioritizes travel and lives near an airport that’s a central hub for one particular airline, they may choose to get an airline credit card that rewards their travel spending with airline miles for future flights.

However, if an individual travels very little, they may benefit more from earning cash back on their everyday spending rather than airline miles.

To figure out where you spend the most, look at your current credit card statements and bank statements from the last quarter. Whichever spending category comes up the most may be a good fit for a rewards card. On the other hand, if there are no clear patterns, a standard cash-back card may be the right fit.

Checking Your Credit Score

Most rewards credit cards require a good or excellent credit score, which typically means a score of 670 or above. Those with a credit score lower than 670 may not be able to qualify for a rewards credit card. Checking your credit score before applying can help you understand how strong your credit is and what type of card you may be eligible to qualify for.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score?

Pros and Cons of Rewards Credit Cards

Credit card rewards cards offer potential advantages, but there are also some disadvantages to be aware of. Here are some rewards credit card benefits and drawbacks:

Making the Most of Your Rewards Card

If you decide to apply for a rewards card, keep these tips in mind to help make the most of it:

•   Spending within your means. It may feel tempting to overspend when every purchase means more points, but overspending can lead to debt, interest charges, and even a negative impact on credit score.

•   Looking for a sign-up bonus. Most rewards credit cards offer an introductory bonus when the cardholder hits a certain spending threshold within a specified period. Plan purchases strategically to hit this bonus.

•   Timing around large purchases. Planning a wedding, buying a house, or making a large purchase? Opening a new card to coincide with those things could help you reach the bonus spending threshold.

•   Using rewards wisely. Rewards are only redeemed when they’re spent. Take time to read up on the fine print around redemption, as there’s often a strategy associated with getting the best value out of card rewards. That may mean redeeming them for a gift card of the highest conversion rate or booking travel through the card issuer’s platform to make miles stretch further.

The Takeaway

Rewards credit card benefits can make them enticing for many credit card holders. But it’s important to weigh the pros and cons. Exploring rewards cards with benefits that fit an individual’s lifestyle and suit their existing spending habits could help maximize the potential rewards.

Looking for a new credit card? Consider credit card options that can make your money work for you. See if you're prequalified for a SoFi Credit Card.

FAQ

What are the benefits of having a rewards credit card?

One main benefit of rewards credit cards is earning rewards — whether points, miles, or cash back — from everyday spending. Rewards credit cards can also offer additional perks, such as free credit monitoring, travel insurance, and purchase protection.

Are credit card rewards taxable?

In most cases, credit card rewards are not taxable, as they’re considered rebates or discounts. However, if a credit card reward is given without the user doing any spending to earn it, then those rewards may be considered taxable income.

What credit score do I need to get a rewards credit card?

Most rewards credit cards generally require a good or excellent credit score in order to qualify. This is typically 670 or higher.

What can I do with credit card rewards?

You can typically redeem credit card rewards for cash, statement credits, hotel and airline bookings, store discounts, or gift cards. Ultimately, what you’re able to do with your credit card rewards will depend on the type of card you have.

Photo credit: iStock/Hiraman

SoFi Credit Cards are issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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The annual percentage rate (APR) of a credit card represents how much someone pays in interest on an annual basis if they carry a balance on their credit card. The lower their APR is, the less they would pay in interest. Because of this, it makes sense to try to secure the lowest APR possible.

Keep reading to learn how to lower the APR on a credit card.

What Is Credit Card APR?

A credit card’s APR represents the total cost of borrowing money using a credit card. The APR on a credit card is the interest rate charged to carry a balance, plus any fees. A credit card can have a fixed or variable interest rate, meaning the rate can either stay the same or change over time based on index rates.

Understanding what APR is can help credit card users know how much they’d need to pay in interest if they don’t pay off their credit card balance in full each month. If they don’t carry a balance, they can avoid paying credit card interest.

Recommended: What Is a Charge Card?

Ways a Lower Interest Rate Can Help

Having a good APR for credit cards is important for a number of reasons. A lower interest rate can save you money. In turn, this can make it easier and faster to pay off debt. Doing so is one way to positively impact your credit score.

The higher your interest rate is, the harder it can be to chip away at your credit card balance, as the bulk of credit card payments will go toward interest. This is why achieving a lower credit card APR can make escaping high-interest credit card debt easier.

How to Lower APR on a Credit Card

If you are interested in lowering your credit card APR, there are steps you can take to try to do so.

Apply for a Balance Transfer Card

If your card has a high APR, one option for how to get a better rate can be a balance transfer card with a lower interest rate. You can then transfer your balance from the high-interest credit card to the balance transfer card.

Usually, this new balance transfer credit card can’t be issued by the same company or any affiliates of the original card. Balance transfer cards may offer a 0% APR promotional period. During that period, you won’t pay any interest, which means all of your payments will go toward paying down the principal.

However, once the promotional period ends, a higher APR will kick in (this is one example of what can increase your credit card’s APR). Additionally, a balance transfer fee may apply to moving over your existing credit card balance to the new card. It might make sense to calculate your credit card interest rate on your old card to ensure you’ll save money.

Negotiate With Your Credit Card Issuer

When it comes to figuring out how to get a lower APR on a credit card, it’s possible to simply ask the credit card issuer for an APR reduction. This strategy may be particularly effective if the cardholder has used their credit card responsibly and consistently paid their credit card bill on time — one of the cardinal credit card rules.

You can also provide a reason why you’re requesting a reduction. You may have experienced a job loss or have unexpected medical bills to pay. Maybe you got a raise and you’re really motivated to pay off your debt, and having a lower interest rate would help you do that. It’s also possible to leverage new credit card offers with lower interest rates to try to negotiate a current APR down.

Consumers can try asking for a temporary reprieve if the credit card issuer won’t offer a lower rate indefinitely. For example, it may be possible to request a one-year rate reduction of 1 to 3 percentage points.

Low-Interest Credit Cards

If you can’t get a lower interest rate on a credit card with your current issuer, you could also step away from using that specific credit card and look into different types of credit cards instead. For instance, you might apply for a low-interest credit card to use in lieu of the card with the higher APR.

Cardholders who have consistently made on-time payments and taken other steps to positively impact their credit score may be able to secure a new card with a lower interest rate. As an added bonus, doing so may make it easier to negotiate a lower APR with a current credit card.

The Takeaway

If you pay off your credit card balance in full each month, you generally won’t have to worry about your APR too much. That being said, it’s always smart to try to secure the lowest APR possible in case it’s necessary to carry a balance from time to time.

Having a lower APR on a credit card means the cost of borrowing money is lower. More of your monthly payments can go toward paying down the principal balance instead of interest. In turn, this can help you pay off your debt faster, save money, and even build your credit score.

Looking for a new credit card? Consider credit card options that can make your money work for you. See if you're prequalified for a SoFi Credit Card.

FAQ

How can I reduce my credit card interest rate?

There are a few options for lowering the interest rate on a credit card. You can try to negotiate a lower interest rate on any current credit cards by calling your issuer and trying to come to an agreement. If that doesn’t work, you can apply for a new credit card that comes with a lower interest rate or a balance transfer card. If you can secure a lower interest rate on a new credit card, you can choose to use that credit card or take that offer back to your current lender to try to negotiate a lower APR.

Why do credit card issuers charge varying APRs?

Credit card issuers use a consumer’s credit score to help determine what the APR on a credit card for that user should be. The reason that APRs vary is because credit card issuers give a custom APR to each applicant based on their financial history. Generally, the lower someone’s credit score is, the higher their APR will be.

Can a lower APR affect my credit score?

Possibly. If you negotiate a lower interest rate with your lender or apply for a new credit card with a lower interest rate, you may be able to pay off your debt faster, reducing the amount you owe (known as credit utilization), which might indirectly have a positive impact on your credit score. On the other hand, opening a new credit card requires a hard credit check that can cause a slight temporary drop in your credit score.

About the author

Jacqueline DeMarco

Jacqueline DeMarco is a freelance writer who specializes in financial topics. Her first job out of college was in the financial industry, and it was there she gained a passion for helping others understand tricky financial topics. Read full bio.

SoFi Credit Cards are issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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Adding supplementary credit cards — credit cards tied to a primary credit card account — can be a good way to help someone establish credit. For example, adding a supplementary credit card for a child could help them build credit, by giving them the benefit of a primary cardholder’s good credit history.

Still, it’s important to keep in mind that the primary cardholder is responsible for any charges made by authorized users on the account, including those with a supplementary credit card.

Read on to learn more about who can benefit from a supplementary credit card and the pros and cons of adding an authorized user to your account.

What Is a Supplementary Credit Card?

A supplementary credit card, also known as an authorized user credit card, is a secondary credit card tied to the account of an existing user. The existing user, who is the primary cardholder, could be a trusted friend, family member, or caregiver. The primary cardholder is responsible for all charges made by any authorized users or supplementary credit card holders.

Recommended: What Is Considered a Fair Credit Score?

How Do Supplementary Credit Cards Work?

When you add a supplementary credit card to your credit card account, your credit card issuer will send a new physical card. They will typically mail the card to the address of the primary cardholder in order to prevent fraud.

In some cases, the supplementary credit card number will be the same as the card number of the primary credit card. In other cases, it may have a different number. Either way, all charges made on the account — including those made by supplementary cardholders — are the responsibility of the primary cardholder.

Supplementary Credit Card Annual Fees

For many credit cards, there is not a charge to add a supplementary credit card or authorized user. However, some premium cards, such as The Platinum Card from American Express, do charge an annual fee for additional cards.

Supplementary Credit Card Sign-Up Bonuses

Typically, on many cards, there is not a sign-up bonus or welcome offer for adding a supplementary card user. There may sometimes be targeted bonuses on certain cards. But generally speaking, if you want to enjoy credit card bonuses, you must apply as the primary account holder.

Supplementary Credit Card Earnings and Redemption Rates

The earnings rates for supplementary credit cards are the same as the rates for the primary credit cardholder. Because the primary cardholder is financially responsible for all charges, they will typically receive the benefits of rewards, regardless of which account makes the charges.

Who Needs a Supplementary Credit Card?

A supplementary credit card can be useful for someone who does not meet the credit card requirements to qualify for a credit card on their own.

For instance, you can get a supplementary card for a child to help them establish credit. Adding them to your account also offers an opportunity for you to teach them the ins and outs of using a credit card responsibly.

You might also add a trusted friend or family member to your account to help them build their credit score — although this will depend on the primary cardholder keeping the account in good standing. Another reason you might add an authorized user to your account is to allow them to take advantage of travel or other benefits when you are not with them.

Pros and Cons of Supplementary Credit Cards

While there are benefits to supplementary credit cards, there are also downsides that are worth noting. Consider these pros and cons.

Do Supplementary Credit Cards Affect Your Credit Score?

Yes, using a supplementary credit card can affect the credit score of both the primary and the secondary user. Depending on how a credit card is used, the effects could be either positive or negative.

If all cardholders on the account use their credit card responsibly, a supplementary credit card could have a positive impact on their credit scores due to how credit cards work. However, if the supplementary cardholder makes charges that the primary cardholder can’t repay, both of their credit scores could go down. Similarly, if the primary cardholder fails to make on-time payments, that could hurt the supplementary cardholder’s credit rather than helping it.

This is why it’s important that both cardholders are on the same page when it comes to credit card rules and best practices.

Recommended: When Are Credit Card Payments Due?

How Much Do Supplementary Credit Cards Cost?

In many cases, there is no charge for adding supplementary credit cards or authorized user cards. However, some credit card issuers do charge an additional fee for adding supplementary cards. Make sure to check with your issuer before ordering one.

Applying for a Supplementary Credit Card

Because supplementary credit cards are tied to the account of the primary cardholder, the person being added to the account can’t apply for a supplementary credit card directly. Instead, the primary cardholder will need to request an additional card from the issuer.

To do so, the primary cardholder can either call the customer service number listed on the back of their credit card or request an additional card through their online account or app.

Alternatives to Supplementary Credit Card

Opening a supplementary credit card may be a good way to help a family member build their credit, but it does come with some risk. One alternative to a supplementary credit card is for the other person to open a secured credit card. These cards are designed to help people build credit and are generally easier to qualify for those with a slim (or no) credit history.

The way secured credit cards work is that the cardholder deposits a certain amount of money into a bank account with the card issuer to “secure” the account. The amount they deposit is their credit limit, and if they pay their bills on time consistently, their credit may be positively impacted.

The Takeaway

Supplementary credit cards, or authorized user cards, are additional cards tied to the credit card account of a primary cardholder. When used responsibly, they can help the authorized user build or establish credit. However, the primary account holder is responsible for all charges made by supplementary cardholders, so there is also some risk if the supplementary credit card is used irresponsibly.

Looking for a new credit card? Consider credit card options that can make your money work for you. See if you're prequalified for a SoFi Credit Card.

FAQ

Are bills paid with the card number of the primary or supplementary card?

The card numbers of the primary and supplementary cards are both tied to the primary cardholder’s account. As such, the primary cardholder is responsible for all charges made, including by authorized users.

Is a supplementary credit card the same as a joint card?

No. A joint credit card account allows two people to use the same credit card account, with both account owners holding responsibility for all charges made to the account. In contrast, a supplementary credit cardholder is not responsible for charges they make. Instead, only the primary cardholder is financially responsible for all charges made by any user.

Who is responsible for a supplementary credit card?

The primary account holder is responsible for charges made by any and all authorized users. Any secondary or supplementary cardholders are not considered financially liable for any charges they make.

Does a supplementary card affect credit score?

Yes, having a supplementary card can affect a person’s credit score. It may help build credit when used responsibly. But because the primary cardholder is ultimately responsible for all charges, their credit could suffer if an authorized user uses the card irresponsibly. An authorized user could also see their score be negatively impacted if the primary account holder fails to manage their account responsibly.

Photo credit: iStock/MixMedia

SoFi Credit Cards are issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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Understanding what it means to be an authorized user on a credit is important for both the account holder and the person being added. This strategic move allows an individual to build a positive credit history by piggybacking on a well-managed account.

However, risks exist for both parties. The primary cardholder is legally responsible for all debt, and negative habits — like high utilization or missed payments — can damage both people’s credit profiles. Success requires clear communication and mutual trust.

Here’s a look at what you need to know, including the process of adding a user and how to manage the account effectively to ensure everyone benefits.

What Is an Authorized User?

An authorized user is someone that the primary cardholder — the individual who owns the credit card account and is responsible for charges to the card — has authorized to use their card. Some points to know:

•   Unlike a primary cardholder, an authorized user on a credit card is not subject to credit checks and other credit card issuer requirements in order to use the card. However, the individual — who is often a spouse, child, or other family member — must meet the card issuer’s age requirements (often 13 – 16 years old).

•   Adding an authorized user is typically free. However, some cards with high annual fees may charge an additional fee for each authorized added to the account. The number of authorized users allowed on each card varies by issuer.

•   An authorized card user will typically get a card with their name on it that is linked to the primary cardholder’s account.

•   Authorized users may be able to view their transaction history, make payments on the account, dispute charges, and request refund checks.

•   An authorized user cannot change the contact information or account PIN, request a change to the credit limit or card’s annual percentage rate (APR), or add more authorized users.

Responsibilities of an Authorized User

While not legally obligated, authorized users are generally expected to follow basic guidelines of responsible credit card use. To maintain trust and protect both parties’ credit health, it’s a good idea to establish some clear expectations:

•   Pre-defined spending limits: In some cases, an issuer will allow the primary cardholder to set spending limits on the secondary card. Even if that isn’t an option, it’s a good idea for the account owner to set a clear monthly budget for the authorized user.

•   Repayment terms: Consider establishing a formal agreement on how purchases will be handled. Will the authorized user pay the primary cardholder directly, or will they make payments toward the account balance themselves?

•   Strict security protocols: Authorized users are generally expected to treat the card as if it were their own — keeping the physical card secure and never sharing account numbers or CVV codes with third parties.

•   Credit awareness: Ideally, both parties should understand that the account’s history — including credit utilization and payment punctuality — will likely appear on both credit reports. Responsible use builds credit, but a missed payment by the primary holder can negatively impact the authorized user.

Authorized User vs. Joint Credit Card

It’s easy to confuse authorized users with joint credit card holders. But there are some key differences between the two.

•   With a joint account, both cardholders are legally responsible for making payments. With an authorized user, only the primary cardholder is responsible for the debt.

•   Joint cardholders also must meet credit card issuer requirements, such as a minimum credit score, and go through the application process in order to get the card. This is not true for authorized users of a credit card.

•   Joint accounts are commonly used by partners who share their finances. Not all credit card issuers allow joint accounts though, and they are becoming less common. Authorized users, however, are widely accepted.

Benefits of Having an Authorized User on Your Credit Card

There are compelling reasons why you may want to either become an authorized user or add an authorized user to your credit card account. Here are the benefits for both parties involved.

Benefits for the Authorized User

Advantages for authorized users include:

•   Opportunity to build credit: A positive history (such as on-time payments and low credit utilization) on the card is typically added to the user’s credit report, which can strengthen their credit.

•   No credit check required: The user can be added without their own creditworthiness being checked, which is useful if they have a poor or nonexistent credit file.

•   Access to credit and perks: Authorized users get their own card for purchases and may access the primary cardholder’s perks, such as passes to airport lounges, hotel benefits, or travel insurance.

•   No legal debt obligation: While they can use the card, the authorized user is not legally responsible for paying the balance; only the primary cardholder is.

Benefits for the Primary Cardholder

Advantages for the account owner include:

•   Increased rewards earnings: Additional spending by the authorized user can the primary cardholder reach spending requirements for sign-up bonuses and accumulate more points, cash back, or miles.

•   Convenience and organization: Household, family, or business expenses can be streamlined, making it easier to track all purchases in one statement.

•   Emergency access: It provides a trusted individual (such as a child or spouse) with financial access in unexpected situations.

•   Building credit for others: The account holder can help a spouse, child, or partner establish or positively impact their credit using your positive payment history.

Adding or Becoming an Authorized User on a Credit Card

Only a primary cardholder can add an authorized user to their card. To do so, you’ll generally go through the following steps:

1.    Notify your credit card issuer. Let your card issuer know that you would like to add an authorized user to your card. In most cases, you can do this over the phone or by filling out a form online.

2.    Have the necessary information on hand. You may need the name, Social Security number, date of birth, and contact information for the authorized user you intend to add to the card.

3.    Check what will get reported to the credit bureaus. It’s important to find out if the card company will report credit information to the credit reporting bureaus for the authorized. This can help the authorized user establish a credit history.

4.    Determine if you’ll give the authorized user full access to the card. Card card issuers usually issue a second physical card with the authorized user’s name on it once they are added to the account. It is up to the primary cardholder to decide whether to give the physical card to the authorized user. You may choose to hold onto the card and only let them use it under your supervision.

Removing an Authorized User on a Credit Card

A primary cardholder can remove an authorized user from their card at any time. Simply call or go online to request a change.

Keep in mind that the authorized user may see a change in their credit score if they are removed. This is because credit score calculations take into account both the age of credit accounts and the number of open accounts, both of which may decrease when an authorized user drops off the card of someone with a more established credit history.

How to Monitor Your Credit as an Authorized User

If you’re an authorized user eager to build credit, it can be helpful to monitor your credit reports to make sure your activity is being accurately reported. You can get free weekly copies of your credit reports from the three credit bureaus — Experian®, TransUnion®, and Equifax® — through AnnualCreditReport.com.

It’s also important for both the authorized user and the primary cardholder to be cautious and mindful about how their activity can affect one another’s credit. Irresponsible credit usage by either party can have implications for the credit of both the primary cardholder and the authorized user.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score?

The Takeaway

Authorized users are typically added to an account held by a family member or other responsible adult. They have access to the card’s buying potential, but it’s the primary cardholder who is responsible for the debt. It’s important for both parties to keep in mind that while their credit usage has the potential to build their credit, it can also cause damage if payments are late or credit is maxed out.

Looking for a new credit card? Consider credit card options that can make your money work for you. See if you're prequalified for a SoFi Credit Card.

FAQ

How many authorized users can I add to a single card account?

Each credit card issuer has different rules concerning the number of authorized users permitted. You’ll find this information in the terms and conditions for your credit card. Some credit card issuers charge a fee for each authorized user added on your account.

Is credit activity reported to the credit bureau for an authorized user?

Typically, credit card issuers report activity to the credit bureaus for an authorized user as well as the primary card holder. Building credit in this way can be a benefit of becoming an authorized user. Check with your credit card issuer to find out if credit activity will be reported for the authorized user.

Does adding someone as an authorized user help their credit?

Building your credit record can be a big benefit of becoming an authorized user, especially if the primary cardholder has a good credit rating and continues to make on-time payments. In order to build your credit record, however, the credit card issuer needs to report your activity to the credit bureaus.

Photo credit: iStock/cokada

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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