Planning To Gift An Add-On Credit Card? Here Is A Checklist

Supplementary credit cards issued to the family members of the primary card holder are known as add-on cards.  There is a possibility of getting more than one add-on card for the same primary card, depending on the policies of the credit card company and the requirements of an individual.

The add-on card holders generally enjoy the same privileges of use as the primary card holders, except that the responsibility of the payment rests with the primary card holder. The add-on cards are issued based on the documents and proofs taken for the primary applicant. The primary holder can if he so desires set overall all limit for add-on card. If more than one add-on cards are issued, then obviously the overall credit limit is divided between the multiple supplementary cards.

While add-on cards offer great advantages to students, dependents or those who are unable to get a card issued in their name, they require certain caution in use by the supplementary card holders and monitoring by the primary holder. Since the responsibility lies with the primary holder for payment and the cards are issued based on his/her credentials, they need to keep the following in mind. 

Monitor the Use on Credit Card: Whether one has only the primary card or supplementary card, it is always important to keep an eye on the card usage. The responsibility of the payment rests with the primary holder.  The primary card holders should apply for mobile alerts so that they know when any card is used. This will help in keeping spending in check as well as steer clear from any potential frauds.

Keep the Credit Utilisation in Mind: Another factor that requires consideration is the credit utilization ratio. All the users must be in tandem about not spending so much on the card so that the credit utilisation ratio goes beyond 30-40 per cent as that also impacts the credit score negatively. Adding users does not automatically increase the sanctioned credit limit, so what happens is that the same credit limit gets divided between multiple card users. If the credit limit is less for use for  more than one users, then the primary card holder could consider getting a bigger limit or make sure that the users are aware about keeping the utilisation ratio within check.

Be Sure Who You are Adding: Do remember that the responsibility of paying on time rests with the primary holders. In case of a default or delay or if the utilization ratio is too high, the CIBIL rating of the primary holders gets a beating and one may be forced to pay late charges or overdue charges and so on. To avoid any such situation the primary card holders should be absolutely sure about who they want to include as an add-on card holder. If required set a limit per day/overall for supplementary cards and do apply for alerts so that you are fully aware of the card usage at all times. 

Disclaimer: All information in this article has been provided by Creditvidya.com and NDTV Profit is not responsible for the accuracy and completeness of the same.