Jeanine Skowronski is the former Executive Editor of Credit.com. ...Read More
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It’s all too easy to do — an errand needs to be run, a cost needs to be covered, an ATM is too far away — and, suddenly, you find yourself turning over your credit card to your kid, spouse, friend or family member. It’s a just a one-time thing (or a once-in-a-while thing), sure, but there’s good reason to refrain from forking over your plastic.
Not Illegal, Just ‘Prohibited’
According to National Consumer Law Center Associate Director Lauren Saunders, it’s not illegal to lend someone else your credit card. In other words,that little loan is not breaking any federal or state laws.
But there’s a good chance you’re violating your credit card contract.
“Nearly all cardholder agreements prohibit loaning a card or at least make it clear that the cardholder is responsible for any charges,” Eric Lindeen, vice president of marketing for ID Analytics in San Diego, California,which offers fraud prevention tools and credit risk management scores to issuers, said in an email. “So it is a violation of your contract, but only ‘illegal’ if there is fraud involved.”
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Federal law limits credit cardholders liability for fraudulent charges to $50. (Debit cardholders, for the record, are responsible for $50 if they report fraud within two days and up to $500 if they report within 60 days. After that, they could find themselves paying for all unauthorized charges.) Most cards tout zero liability policies that provide even more coverage.But all those stipulations are essentially rendered null and void if you willingly turn your plastic over to a friend or family member and fraud ensues.
So, say, the person you lent your card to picks upshoes for themselves alongside that coat you asked them to pick up, you’re most likely going to wind up paying for those Manolo Blahniks.And, in a worst-case scenario, you could also lose money if said person lost your card, someone else were to find it and identity theft took place — though the federal protections will generallylimit your liability as previously specified.That’s because most zero liability policies won’t apply if there’s evidence of “gross negligence” on part of the cardholder — and, yes, lending your card to someone else can fall under this umbrella.
Finding Another Way to Pay
“It’s definitely not recommended,” a Visa spokesperson said in an email, regarding giving someone else your credit card.
Of course, there are ways you can arrange for a family member to have a plastic way to pay for items without violating your credit card agreement.
Many issuers allow primary cardholders to add authorized users to their account, and while you’d still be liable for any charges this person makes, you do generally have control over whether or not they stay on the account. Some issuers, too, will let you set spending limits or set up alerts for authorized users. And, at the very least, that personwill have a card in their name to make payments, so they won’t risk getting declined or flagged by merchants for trying to make a purchase with someone else’s card. You could also consider co-signing or opening up a joint accountwith someone close to you, though there are different risks associated with that as well.
Finally, should you ever “lend” your card to someone else, be sure to keep a close eye on your statements. That way, you can spot any unauthorized charges (from the borrower or someone else) as soon as they occur. You may wind up paying for those purchases, but you’ll at least be able to stop any more from occurring so long as you call the issuer and have the card replaced.
And, of course, if you ever have reason to believe someone let your personal information get compromised along with your payment numbers,it’s a good idea to keep an eye on your credit for signs of deeper identity theft. (You can do so by viewing two of your credit scores for free each month on Credit.com.)
There are no state or federal laws making it illegal to share your credit card with someone. Often, the convenience of lending your card to a family member or friend for a quick purchase seems harmless enough not to give it a second thought.
The primary cardholder has to add an authorized user. This can be done by calling the credit card issuer or logging onto the online account. Many issuers will issue a second card for the authorized user, but it will generally be mailed to the primary cardholder, who can choose to give it to the authorized user or not.
In some cases, friends are also authorised. Some credit card companies issue multiple cards attached to a single credit account, and the primary cardholder is responsible for making repayments. Other companies issue only one card which can be shared by the cardholders with their relatives or friends.
While few credit cards allow joint cardholders, many credit issuers allow you to add your partner as an authorized user on your credit card. That way, your partner can use your line of credit to make purchases — and, in some cases, use your credit history to build their credit score.
While some card issuers may allow your child to use your card with permission, your child is technically committing fraud without permission. Make sure your kids know that your card is only for your use unless you've checked the terms and conditions and given express permission.
A credit card cannot be issued without your consent as per RBI regulations. Unwanted debt: Since you did not budget for the credit line, unanticipated debt may result. Identity theft: The card may be used fraudulently if it is obtained by an unauthorised person.
The best way to give someone access to your credit card is by making them an authorized user. Even though you'll still be liable for their purchases, you can set up spending limits or alerts for them. And, ultimately, you have control over whether or not they stay on your account.
Can an authorized user be denied? Yes, authorized users can be denied. Typically, the reasons are more straightforward than with a typical credit card application.
How to add or become an authorized user on a credit card. Account holders can often add authorized users by signing into their account online or through an app. If you're interested in becoming an authorized user, consider asking a trusted friend or family member to see if they're willing and what options are available ...
If you want to share a credit card account with someone, consider adding them as an authorized user on one of your cards. Keep in mind that only the primary cardholder will be financially responsible for the account, so an authorized user should be someone you really trust.
Bank investigators will usually start with the transaction data and look for likely indicators of fraud. Time stamps, location data, IP addresses, and other elements can be used to prove whether or not the cardholder was involved in the transaction.
Just one example of identity theft is when a spouse opens a credit card in the other spouse's name without their knowledge or consent. This act not only violates the trust within the relationship but also constitutes a criminal offense.
It is because the card is issued to you for your personal use and not for your friends or relatives. However, it is not illegal to hand over your credit card to someone else, but you should avoid doing so or do it at your own risk.
Being added as an authorized user on another person's card may help you establish a credit history or build your credit. Yet cardholders and authorized users' on-time, late or missed payments will be added to both parties' credit reports, so it's important that cardholders and authorized users see eye to eye.
Explain which unauthorized transactions were made to your account, tell them the dates and dollar amounts of the charges, and say you would like to dispute — challenge — the charges.
The credit card issuer must prove that the charge was legitimate. If they cannot prove that the charge was authorized, they will refund you for the amount of the unauthorized transaction. Until the dispute is resolved, you don't have to pay for the transaction.
The victim can sue the thief for theft and fraud. If the thief's identity is not known, it may be possible to file a lawsuit with a John Doe defendant.
It's not illegal to let someone do that with their permission, but no bank will do that unless you present them a power of attorney, which is a legal document, signed and notarized and/or witnessed specifically granting that power.
Once your child is an authorized user, the credit card company allows all charges made by your teen as if they were you, legally. If you choose to add your child to your credit card account, make sure they clearly understand how they can use the card and the consequences of using it to make a purchase.
Introduction: My name is Margart Wisoky, I am a gorgeous, shiny, successful, beautiful, adventurous, excited, pleasant person who loves writing and wants to share my knowledge and understanding with you.
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