Alternate definition: The primary account holder is responsible for maintaining all transactions associated with a credit card or bank account.
For instance, if you’re the primary account holder, or borrower, on a credit card, you can add an authorized user to your account. That person will receive their own card that they can use to make charges, within the scope of any spending limits you’ve set for them.
How a Primary Account Holder Works
There are two main types of accounts a primary account holder will operate: a bank account or one for a credit card. The application process and responsibilities involved vary slightly for both types of accounts.
Bank Account
When you open a bank account, you’ll usually need to give the bank your name, address, and Social Security number. As the primary account holder on a bank account, you’re responsible for keeping that account in good standing. That involves maintaining the minimum balance on all of your accounts and avoiding overdrafts.
Credit Card
Applying for a credit card is a bit more rigorous than opening a bank account. In addition to supplying personal information, you’ll have to undergo a credit check. As the primary account holder on a credit card, you’re responsible for making timely payments and paying down the debt. You also can make changes to the card, such as adding an authorized user to the account or seeking an increase in your credit limit.
Primary Account Holder vs. Authorized User
Sometimes, a primary card holder will add a friend or family member to a credit card. The secondary account holder is referred to as an authorized user, and that person has different responsibilities and requirements. The primary account holder has the authority to make changes to the card. They can add or remove an authorized user or cancel the card. In comparison, an authorized user can’t make any of those changes. If the primary card holder stops making payments, both individuals will see their credit scores go down. If the authorized user runs up a high balance, the primary account holder is responsible for repaying that debt. For that reason, always be careful when giving an authorized user access to your credit card or bank account. You should only become an authorized user on someone else’s credit card if you trust that person to make on-time payments.
