Outlook Money
Add-on credit cards let a primary cardholder share a single credit limit with family members. Users get separate cards, but responsibility and ownership remain with the primary cardholder.
Though convenient, add-on cards impact credit assessment. Banks consider the combined credit limit as a single exposure, thus affecting loan eligibility and repayment capacity, even if spending is shared.
All spending, whether by the primary or add-on users, counts toward the total outstanding balance. Banks see the entire credit limit as exposure, thereby increasing perceived financial liability.
Multiple users can push utilisation above 50 per cent, signalling cash flow stress, even if payments are made on time.
Banks assume 3-5 per cent of total credit limits as monthly obligations. Add-on cards increase assumed liabilities without increasing income, reducing overall loan eligibility.
Any late payment, even by an add-on user, is recorded against the primary cardholder. This can harm credit scores, increasing future borrowing costs.
For home, education, or car loans, lenders scrutinise unsecured exposures closely. High add-on card limits may lead to requests to pay off debts or close cards before loan approval.
Add-on cards are convenient, but affect borrowing silently. High limits, utilisation, and repayment risks reduce loan eligibility.