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Add-on cards are additional credit cards linked to the primary account. The primary cardholder can easily apply for an add-on card for his family members. It will have access to the same credit limit as the primary user and the primary cardholder will be responsible for making payments. Add-on cards usually have the same number as your primary card, but the name on the card is different. Think of it as a copy of your primary credit card. Any spending on the add-on card shows up on your main account. The fee of an add-on card depends on what type of card has been applied. Add-on credit cards have multiple benefits and drawbacks. Before applying for one, one should be aware of all the plus and minus points on the card. Continue reading to learn more about them.
Pros of an Add-on Credit Card
Helps in Credit Score Improvement
When you use an add-on card responsibly by making purchases and paying them off on time, these activities get reported to the credit bureaus under the primary cardholder’s account. If the card is used wisely and payments are made on time, it can build a good credit score for the add-on card user, especially if they are new to credit or looking to improve their credit history. It’s a simple and effective way to help someone establish their credit score through shared financial responsibility.
Rewards and Offers
Rewards and offers on an add-on credit card can be pretty exciting as these cards come with benefits similar to what the primary cardholder enjoys. If your main credit card offers cashback on purchases, points for every rupee spent, or discounts at specific stores, the add-on card will likely offer the same perks. So, every time you or a family member uses the add-on card for shopping, dining out, or booking travel, you’ll earn rewards or save money just as if you were using the primary card. It’s a great way to maximize benefits from your credit card’s reward program, mainly if multiple people contribute to the spending.
One example of additional benefits offered by add-on credit cards can include the latest offer by SBI Card which has launched a limited-time deal for add-on cards from 15th April 2024 to 30th June 2024, where cardholders will receive an Amazon voucher worth Rs. 500 with a new SBI add-on card application.
Higher Credit Limit
An add-on card provides a higher credit limit, which gives you more spending power without needing a separate credit card. This can be beneficial if you have a family member or friend who needs to make a large purchase and they are not eligible for a credit card or have a low credit limit. With an add-on card, you can give them instant access to your credit limit, allowing them to make the purchase without worrying about their credit limit.
Easy Tracking
An add-on card offers easy expense tracking since all spending on the add-on card shows up on the main account, making it simpler to manage finances. This can be helpful if you have a family member who needs to make purchases for household expenses or if you want to keep track of your child’s spending.
Cons of an Add-on Credit Card
Shared limit
A shared limit on an add-on credit card means that the primary cardholder and the add-on users share the same credit limit. If the add-on card is used a lot, it can take away a large part of the credit limit, leaving less available credit for the primary holder when needed. This could become a problem in emergencies or when a large purchase needs to be made. Plus, if not managed carefully, this shared spending power increases the chance of maxing out the credit limit, which might lead to overspending and difficulty in keeping finances under control.
Increased Debt Risk
When you have add-on credit cards, it means that more people can spend from the same account. However, this may lead to overspending, especially if everyone is not careful. If everyone keeps withdrawing money without keeping track, you may end up with less money than you initially thought or even owe more than you can easily pay back. This situation can quickly lead to building up debt, making it difficult to manage finances and maintain a good credit score. Therefore, the primary cardholder should keep an eye on spending and establish clear rules for how and when the add-on cards can be used to prevent getting into debt.
Bottom Line
Add-on credit cards are an excellent way to share the benefits of a credit card account with family members. It helps them build a good credit history, enjoy rewards, and access to a higher credit limit. However, it is important to use them wisely. Remember that sharing a credit limit requires caution to avoid overspending, which can lead to debt that is difficult to manage. One can enjoy the benefits of an add-on card without the drawbacks by keeping an eye on spending and setting clear rules for using the card. Before applying for an add-on credit card, collect all the necessary information about it and all the rewards, charges, and interests that come with it.
Credit Cards Offers Convenient Transactions but Mindful Debt Management
