If you want to make life of your loved ones simpler, explore the option of giving them supplementary cards or add-on credit cards. It will not only give them freedom but also a lesson in financial responsibility, says Rajiv Raj
Do you have a loved one, maybe your spouse, a parent or child who you want to have access to plastic money? You have thought about the gift card but then it is prepaid card and they have a set limit after which you either have to take a new one or reload the existing one.
We all know the ease and convenience that plastic money provides but there might be some instances when an individual cannot get a card issued for herself/himself.
In such a scenario if you want you can gift them an add-on card which offers a more permanent and user-friendly solution.
Add-on card explained
Add-on or supplementary cards, as the name suggests, are additional cards that are issued to family members (above the age of 18) of the main credit card holder as requested by her/him.
These cards let the family member or dependant use the card as per the set rules while the responsibility of payment lies with the main holder.
Each card issuer has rules laid down for issuing add-on cards.
The primary holder can get more than one supplementary card issued, thus if required you can gift a card to more than one loved one. Depending on the card company’s policies the number of additional cards that can be issued for the primary card can vary.
The users of add-on cards are not required to provide any documents or income proofs; these cards are issued based on the documents provided by the primary card holder. The privileges allowed to supplementary card user are same as that of the primary card holder except maybe the credit limit.
Usually the credit limit for supplementary cards is same as that of the primary card but in some cases it may be lower as per a policy of the card company or if the primary user so requests.
Depending on the primary card holder’s choice the overall card limit and also the per day limit for the add-on cards can be fixed. If there is more than one supplementary card then this sub-limit is divided by the number of card users.
Most banks offer add-on cards without any cost, while some may offer a fixed number of cards free and charge for additional cards beyond the free limit; a few banks may charge also for any add-on card that is issued. This will have to be checked with the card issuer before getting one.
All supplementary card transactions are recorded in the same statement as that of the primary holder and the consolidated statement is sent to the primary cardholder who is responsible for the final payment.
The primary card holder can track the transactions made per card and if so desired can opt for alerts too; this makes monitoring card usage easier.
The convenience
Students, housewives, retired parents or sometimes even fresh graduates may find it difficult to get cards issued in their name as they may not have the necessary documents. Carrying cash always is not a great option and debit cards don’t give access to credit.
In such a scenario if you want to make the life of a loved one simpler then you should explore the option of giving them a supplementary card.
The primary holder can monitor and control the expenditure (if so desired) and the loved one can enjoy all the privileges accorded by a credit card.
Exercise caution when gifting a card
While add-on cards provide great convenience to the user, the primary holder must be careful when getting them issued.
The responsibility of payment lies with the primary holder, so s/he must ensure that the supplementary card holders are apprised about responsible card usage.
A high credit utilisation ratio can harm the credit score, irresponsible and reckless spending can create payment issues at the end of the payment cycle and so on. It is especially important to do so in case there are more than one add-on card users as tracking all of them might be little difficult.
So when you plan to gift an add-on card be sure about who you are gifting it to; the person must be trustworthy and responsible.
Gifting a supplementary card is great way to offer financial convenience to a family member; this can also help the card user learn how to be responsible borrower and can be lesson in financial planning too. So explore this option if you want them to be comfortable even when you are not with them.
Illustration: Dominic Xavier/Rediff.com
The author is a credit expert with 10 years of experience in personal finance and consumer banking industry and another 7 years in credit bureau sector. Rajiv was instrumental in setting up India's first credit bureau, Credit Information Bureau (India) Limited (CIBIL). He has also worked with Citibank, Canara Bank, HDFC Bank, IDBI Bank and Experian in various capacities.
