Should You Get an Add-on Credit Card for Your Family?

In this article, we will discuss the concept of add-on credit cards, how they work, their pros and cons, and whether you should get an add-on credit card for your family.

What Is an Add-on Credit Card?

Add-on credit cards, also known as supplementary credit cards, are extra credit cards against a primary credit card. These serve as secondary cards or additional counterparts to the primary credit card.

Credit cards have proven to be highly beneficial, offering the flexibility to borrow substantial funds swiftly when the need arises. Additionally, they provide access to exclusive offers and the accumulation of reward points with each transaction. However, meeting specific criteria is essential for credit card eligibility, requiring a steady income, a satisfactory credit history, and a credit score within the applicable range.

For individuals like students or those who have recently started working, meeting these criteria can be challenging when applying for a credit card. Nevertheless, there are strategic approaches to leverage the advantages of a credit card, particularly if a family member already holds one. In such cases, using an add-on credit card becomes particularly relevant. This supplementary card, linked to an existing credit card account, offers a practical solution for those facing hurdles in qualifying for a regular credit card.

How Does an Add-on Credit Card Work?

Add-on credit cards are offered with most credit cards. However, the number of supplementary cards you can get depends on the specific variant of your primary card. During the application process, you can verify whether your main credit card offers add-on credit cards. Typically, card issuers grant a limited number of add-on cards at no cost, often up to 2 to 3 cards, beyond which you may incur a joining fee and an annual fee for each additional card.

Many card issuers provide add-on credit cards without imposing any joining or annual fees. These supplementary cards are essentially lifetime-free credit cards, featuring an equivalent credit limit to that of the primary credit card. Depending on your card variant or the issuer's policies, you can apply for a maximum of 2 to 5 add-on cards. However, it is worth noting that certain issuers may impose joining or annual fees on specific types of add-on cards.

Let's say you have a credit limit of 3.5 lakh on your primary credit card, and you have obtained two add-on credit cards for your children. Assuming no specific limits are set on any of the cards, the collective credit limit for the primary card and the two supplementary cards will be Rs 3.5 lakh. Consequently, if one child spends Rs 50,000 on their card and the other spends Rs 20,000 on theirs, your remaining credit limit on the primary card will be Rs 2.6 lakh.

What Are the Pros of an Add-on Credit Card?

1. Empowerment through Credit Access:

An add-on card empowers family members who lack an individual credit card, granting them the freedom to spend beyond the cash in their wallets.

2. Budgeting Assistance:

The add-on credit card facilitates budgeting as it consolidates expenses into a single statement, making it easier to track and manage household expenditures.

3. Enhanced Rewards and Cashbacks:

Opting for an add-on credit card boosts reward points and cashback when compared to cash transactions, offering additional value.

4. Expense Tracking for Kids:

The add-on card not only offers freedom to family members but also facilitates tracking of their expenses, a particularly useful feature for college-going students.

5. Optimising Discounts and Offers:

Banks may treat add-on cards independently for various discounts or cashback offers, enabling users to optimise savings during promotional events. For instance, if a credit card company offers a benefit of Rs 5,000 per credit card, with one add-on credit card, you could earn double the discount in a festive sale.

What Are the Cons of an Add-on Credit Card?

You might exercise caution in using your credit cards responsibly, considering where and how they are used. However, not all family members may share the same level of awareness, and their lack of understanding or carelessness could lead to potential issues. While there are protective measures to limit liability in cases of fraud, these safeguards rely on promptly reporting fraudulent transactions to the bank.

Furthermore, if a family member handles the credit card irresponsibly, it could result in a significant increase in the credit card bill. Essentially, both you and the family may end up exceeding the usual spending limits, creating an undesirable scenario. In the event of untimely repayment, you may not only incur high costs associated with credit card debt, but your credit score would also be negatively impacted.

Hence, it is crucial to carefully consider to whom you extend the privilege of an add-on credit card. To mitigate the risk of overspending or misuse on the add-on card. It is advisable to implement sub-limits for card usage.

Important Things to Consider Regarding Add-on Credit Cards:

• It is important to note that when settling dues, all transactions conducted with add-on credit cards will be consolidated into the single primary credit card account. Additionally, all transaction details are systematically documented on the primary credit card, facilitating seamless tracking for the primary cardholder. This comprehensive tracking system ensures transparency in the spending activities of each add-on credit card holder.

• The combined credit limit for all add-on cards will fall within the overall credit limit allocated to the primary card. If you wish, you can put sub-limits to each card. Sub-limits are also applicable for ATM withdrawals.

• Confirming that the individual receiving the supplementary card is financially responsible is crucial, as the add-on card directly influences your financial well-being and credti rating.

• Inquire with your card issuer regarding the terms and conditions associated with the add-on cards you are planning to get.

• Add-on cards are well-suited for individuals aged 18 and above who have a grasp of credit fundamentals before securing stable employment and applying for their independent credit cards.

• The payment of bills and the usage patterns associated with add-on cards are interconnected with the primary account. Any irregularities or mismanagement of the add-on card may adversely affect the primary cardholder's credit score.

• Given the considerable time required to establish a credit history, the primary account holder must ensure the responsible use of add-on cards to prevent any negative impact on the overall credit history.

Should You Get an Add-on Credit Card for Your Family?

Add-on cards facilitate shared financial responsibilities, tracking of expenses, and potentially earning rewards collectively. However, drawbacks include the risk of overspending, as charges on the add-on card contribute to the primary cardholder's balance.

Additionally, any misuse by the supplementary cardholder could impact the primary cardholder's credit score. Therefore, whether to acquire an add-on credit card depends on individual financial goals, trust among family members, and a comprehensive analysis of the potential benefits and risks associated with opting for add-on credit cards.

To conclude:

Supplementary credit cards prove beneficial when expenditures need to be dispersed across various locations simultaneously. It is recommended that the primary cardholder exercise responsible usage to prevent exceeding the set spending limits. Consistently monitoring expenses is essential to uphold a positive credit repayment history.

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KETKI JADHAV is a Content Writer at PersonalFN since August 2021. She is an MBA (Finance) and has over seven years of experience in Retail Banking. Ketki specialises in covering articles around banking, insurance, personal finance, and mutual funds and has been doing it for over three years now.

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This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes.