Pros and Cons of Add-on Credit Cards

Add-on credit cards, also known as supplementary credit cards, are issued against a primary credit card and comes with similar credit limit and benefits as that of the primary card. The add-on card is offered to the family members of primary cardholders like his/her parents, spouse, or children above the age of 18. Most of the card issuers offer add-on credit cards for free but only a handful of people actually avail this benefit. There is a limit on the number of add-on credit cards that you can get on your existing card along with other terms and conditions.

Now you must be thinking is it really a good idea to get add-on credit cards for your family members?

The answer to this question differs from one user to another and this is what we will talk about in this article. Before this, let us first get a basic understanding of add-on credit cards.

How Add-on Credit Cards Work

Add-on credit cards are offered on almost all credit cards. However, the number of add-on cards varies as per the variant of your card. You can check at the time of applying whether your primary credit card allows you to avail an add-on credit card. Usually, card issuers let you take a few add-on cards for free, say up to three cards, but the number is limited after which you would have to pay a joining and annual fee on every supplementary card you take.

Also read: Top Credit Cards in India | Check your Eligibility for Top Cards

Points to Remember:

• Remember that all transactions made on supplementary credit cards will be directed to the single primary credit card account when it is about paying the dues
• All information will also be recorded on the primary credit card so that it is easy for the primary cardholder to keep track of the transactions.
• The credit limit set on all add-on cards collectively will be within the total credit limit on your primary card.

Let us understand the above point with an example:

Suppose you have a limit of 1.5 lakh on your primary credit card and you have taken two credit cards- one each for your wife and son. Given that you have not set any limit on any of the cards, the two supplementary cards plus the primary card will have a total limit of Rs. 1.5 lakh. So, if your wife spends Rs. 40,000 on her card and your son spends Rs. 20,000 on his, then you will be left with a limit of Rs. 90,000 on your primary card. Some banks may also distribute the limit across all cards. In that case, the 1.5 lakh will be equally distributed across the three cards in the values of Rs. 50,000 each.

Also read: How Banks Determine the Limit on Your Credit Cards

Who Can Apply for an Add-on Credit Card?

The primary cardholder can apply for the add-on card if is offered on the primary card variant. You have to fill out the application form to apply for an add-on credit card. You can apply for an add-on credit card for spouse, parents, children and siblings who are at least 18 years old. However, this eligibility varies from issuer to issuer.

Pros of Add-on Credit Cards

With add-on cards, you can avail multiple benefits like increased credit limit, accumulate higher rewards, achieve spending milestones easily and much more. Here are some of the advantages associated with add-on credit cards:

Accumulate Reward Points on All Cards

When payments are directed to your primary credit card, rewards earned on all credit cards will also be directed to the primary card. So, it is easier for you to earn more reward points. The accumulated reward points can be redeemed against gifts and merchandise or converted to air miles if your card issuer allows you to do so. The more supplementary cards you have on your primary card, the higher will be the chances to earn reward points.

Achieve Spending Milestones Quickly

Several credit cards, especially the premium ones, offer milestone benefits which mean that on reaching a certain spending threshold you will be awarded with bonus reward points or an annual fee waiver. When the entire credit limit is used by only one person, it becomes difficult to reach that spending threshold but when it is distributed across two or three people, it means more purchases will be made, hence it becomes easier to reach the milestone.

Introduction to Credit for Secondary Users

Giving your kid an add-on credit card can work as a good introduction to credit. But you should also encourage your children to monitor the spending on their credit cards; make them understand the statement and reward points earned. Those who do not qualify for getting a credit card due to low credit score or any other reason would also find add-on cards beneficial. Although add-on cards do not help in improving or building the secondary user’s credit score, they can be good for getting additional spending power and understanding credit.

Suggested read: Benefits of Using a Credit Card | Check your Eligibility for Top Cards

Cons of Add-on Credit Cards

Getting supplementary credit cards for your family members can be beneficial but at the same time, it has some drawbacks. Here are some of the disadvantages of having an add-on credit card:

Affects the Primary Cardholder’s Credit

This is the major drawback of giving an add-on credit card to a family member. Since all the dues will be directed to the primary cardholder’s account, late payments or defaults will also affect the primary cardholder’s credit directly. So, if as the owner of the primary card, you do not keep a check on the total spending made by secondary users, you might end up comprising your own credit score.

Also read: How to Improve your Credit Score? | Check your Eligibility for Top Cards

Things to Consider Before Getting an Add-on Credit Card

Here are a few things you should keep in mind before getting an add-on card on your primary one:

• You should make sure that the person you are getting the supplementary card for is a credit-responsible person as an add-on card directly impacts your financial health and credit score
• You should ask your issuer about the terms and conditions related to the add-on cards you are taking. If you are taking under the no annual fee offer, you should not have to pay any fees in the first year but you must ask the issuer whether it is a one-time offer or the card is free for a lifetime.
• Add-on cards work very well for individuals above the age of 18 as they know the basics of handling credit before they get a stable job and can apply for their own credit card
• Like any other offer, a number of terms and conditions will be involved when you take an add-on credit card. It is better to ask questions in advance and clarify everything than regret it later.