Using a Credit Card can be quite exciting, but there may be times when your family or loved ones may need to use it. Sharing your card or constantly providing OTPs for their transactions can become inconvenient.
That’s where add-on cards come in. These cards allow your family members to have their own card linked to your account, so they can make transactions independently and you maintain full control over spendings.
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What Are Add-On Credit Cards And How Do They Work?
Add-on cards are issued in addition to the existing card, or primary card. Only the primary cardholder can apply for an add-on card. You should check the number of add-on cards you can apply for before doing so.
Eligibility
Add-on Credit Cards can be used by the primary cardholder’s spouse, family members and children. The children should be 18 years of age or older. For instance, students and non-earning members who have to spend can use these cards.
Credit Limit
When you apply for an add-on card, you share your credit limit with the add-on cardholders. For example, if someone has a total credit limit of ₹1,00,000 and 2 add-on cardholders. So, all of them can collectively spend up to ₹1,00,000.
If one family member spends ₹40,000, the remaining ₹60,000 is available for the primary cardholder and the other add-on cardholder.
To avoid confusion, it’s a good idea to set up a way for add-on cardholders to inform you about their spending. This helps everyone stay on the same page and manage the shared credit limit better.
Credit Score
Contrary to popular belief, only the primary cardholder’s credit score gets impacted when they apply for add-on Credit Cards. That’s because these cards are linked to the primary cardholder’s account.
So the card issuing authority only holds the primary cardholder liable for all transactions.
Ideally, the family members and primary cardholders should not spend more than 30% of the available credit limit. For instance, you and your family members using add-on cards can use a Credit Card EMI calculator before making any major purchase. This way, you can plan your monthly budget and manage the shared credit limit effectively.
How Do They Impact Your Account Management?
Positive Impact
Your dependents are able to enjoy financial freedom and make independent purchases without relying on you constantly. At the same time, setting limits on the add-on card helps them manage spending responsibly.
With add-on Credit Cards, the spending by your family members also contributes toward your rewards and cashback. That’s because some cards need you to spend a certain amount to unlock privileges like lounge access.
Another benefit is that you can get an add-on card for minimal or no cost, helping you avoid additional expenditure.
Some Things You Should Watch Out For
Primary cardholders should be aware of a few things when applying for add-on cards. First, overspending by any add-on member can affect your CIBIL score, since all transactions are linked to the primary account. Second, there is a possibility of misuse or unauthorised spending. Hence, proper limits should be set.
Also, as the primary cardholder, you are responsible for the entire bill, so careful monitoring and budgeting are essential.
Conclusion
Having an add-on Credit Card can be a great experience, provided you use the card responsibly. Both you and your dependents should practice good financial habits, such as keeping a healthy credit utilisation ratio.
Maintaining this discipline not only helps you build a strong credit score but also makes it easier to increase your credit limit and enjoy more rewards and benefits.
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