There is a feature associated with credit cards which we call add-on card. Under this, you give a separate card linked to your card to any member of your family so that they can spend. But remember, you only share the privilege of spending, not the responsibility. If there is excess expenditure or payment is delayed, the entire responsibility will be yours. Let us tell you about it in detail, how it should be used and what things should be kept in mind. Let us understand everything one by one.
The add-on card is linked to your already existing credit card account. In this, the primary cardholder remains the owner of the account, while the add-on user is given a separate card, number and PIN. However, all the expenses incurred by both are added to the same account. This means that if your total credit limit is Rs 4 lakh, then even after the issuance of the add-on card, the limit will remain Rs 4 lakh and both the users will spend within the same limit.
The most important thing regarding payment is that its entire responsibility lies with the primary cardholder. The bill is always drawn in his name and the bank expects payment from him. If the add-on card user spends and payment is not made on time, its direct impact falls on the primary cardholder only.
Expenses and payments related to add-on cards affect the credit score of the primary cardholder only. If for some reason the payment is late or missed, its entry in the credit bureau is made in the name of the primary user only. For example, if your card limit is Rs 5 lakh and the add-on user spends Rs 2.5 lakh out of it, and you are not able to pay the bill on time, then this can damage your credit score. Especially when you want to apply for a home loan or any big loan later, even a single late payment can have a negative impact on your profile.
There are ways to control expenses, but for this you need to be cautious. Most banks provide the facility to set a specific sub-limit for add-on cards, through which you can decide the amount up to which the secondary user can spend. Apart from this, with the help of mobile app and real-time alerts, you can keep an eye on every transaction. However, despite all this, the responsibility of the total expenditure remains on you. Therefore it is important that you limit your credit card usage. Generally, it is advisable to use only 30 to 40 percent of the total limit, as spending 70 to 80 percent is considered risky in the eyes of lenders.
Many people have a misconception about the rewards available with add-on cards that the benefits are doubled, whereas this is not the case. All reward points are credited to a single account, that of the primary cardholder, and the reward limit also applies to the entire account and not to each card individually. Talking about fees, many banks provide add-on cards for free to their customers, especially for family members. However, in some cases a small fee may be charged, such as Rs 100 plus GST, and in premium cards this fee may be slightly higher.
