What is an add-on card, and how can it help your child?

As a parent, you want your children to be financially independent and responsible. As the first step in that direction, you can add your child as an authorised user to your credit card as an add-on card user.

Banks offer add-on cards to the family members of primary cardholders, including children who are otherwise ineligible for regular credit cards. Adding your child to your credit card can also build their credit score and history. In the long run, good credit history can help with easy approvals on loans or mortgages.

In the following sections, you will walk through the basics of an add-on card, its benefits, the need for responsible usage, and tips on monitoring these cards.

What is an add-on card?
 

• Most banks in India offer add-on cards as a supplementary facility for the primary cardholder
• An add-on card carries the same features as the primary credit card, and you can add a family member, including your child who is 18 years or above
• Generally, a credit card issuing bank provides two or three add-on cards for free. However, it varies from one bank to another

What are the benefits of an add-on card?

There are several benefits of an add-on credit card. The key ones are below -

• No joining and annual fee -
  
  

  If your issuing bank does not charge any joining and annual fee, it will save you money. For example, the add-on cards for IDFC FIRST Bank Credit Cards are lifetime free with zero joining or annual fees.

• Access to emergency funds -
  
  

  Your child, at times, might need urgent financial assistance to meet an expense. Having an add-on card can be handy in such situations and can work like an emergency fund for them.

• Add-on cards get similar rewards for spending -
  
  

  An add-on cardholder receives similar rewards as the primary credit card for their spending. It can help them accumulate points and miles for future shopping discounts or cashback. 

• One consolidated statement for all the cards -
  
  

  Since, in most cases, there is one consolidated statement for the primary card and additional cards, it helps to check the spending and charges at a glance.

Reasons to teach your child financial discipline before giving an add-on card
 

• When you add your children to your primary credit card, you are responsible for all their spending. Therefore, you must educate them about using the card wisely (staying within budget, using it only for emergencies, etc.) before handing it over
• For most credit cards, add-on users get the maximum credit limit of the primary card, which can be risky. Your bank may allow you to set an add-on card limit to help you keep your children accountable for their expenses
• Your guidance and setting a credit limit can encourage your children to make on-time payments and not spend more than they can afford to pay back. It can lay the groundwork for them to manage their credit card responsibly 

Tips for monitoring an add-on card

To ensure your children are using the add-on card wisely, you can monitor their spending in the following ways

• Set up usage alerts -
  
  

  If your bank provides a mobile app, you can set up alerts to receive notifications whenever there is an expense.

• Track all the expenses -
  
  

  You can use a spreadsheet or a free budgeting app to track the primary and add-on card expenses. It will help you see where your money is going.

• Check the transactions online -
  
  

  You can log on to your credit card account and check the transactions online to monitor your child’s spending.

What’s next?
 

As a primary cardholder, you can get three to five add-on cards to give your loved ones financial freedom. However, it is advisable to be practical and set an add-on card limit.

You can easily apply for an add-on card with IDFC FIRST Bank Credit Cards. You only need to fill out an online add-on application form, and if you fulfil the eligibility criteria the bank has set, you will receive an add-on card(s) in a few days.

 

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.