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October 2008 - You could be a supplementary credit cardholder without your consent

You could be a supplementary credit cardholder without your consent

☳ by Adam Aspilla

In my previous article I mentioned that to be a supplementary cardholder is not always good for your credit rating could be damaged if the principal credit cardholder defaulted his/her payments. 

One way of protecting your credit rating is to avoid becoming a supplementary credit cardholder as you have no control over the use of a credit card by the principal credit cardholder. Though you may not want to be a supplementary cardholder, you could be one without you knowing it or without your consent.

Your relative or a friend who is a credit cardholder could simply ask a credit card company to issue a supplementary credit card for you without your prior approval. It means your friend or relative could request a credit company that you be given access to his/her credit limit by issuing you a supplementary card.

Once a supplementary card is mailed to you, you have the option to use it or refuse to use it. Upon using it, you become automatically a co-signer of the total amount owing on said credit card. If the principal cardholder (your relative or friend) could not pay, the credit card company would run after you.

On the other hand, should you decide not to use it, do not reactive the card and return it to the credit card company. In that way you could be absolve of any financial obligation in the future should the principal cardholder would be unable to pay the amount he/she owes on the card. If you reactivated the supplementary card even if you did not use it, it could be technically interpreted that you consented to be a supplementary cardholder and therefore a co-signer.

A case in point was a woman who called me while I was writing this article. She was indebted the amount $120,000.00 in credit cards and line of credits. I asked her if there was a supplementary card holder of her credit cards. She said, her son was a supplementary card holder of one of the credit cards which had an outstanding balance of $28,000.00. The woman lost her high paying job and she has no other option but to file for bankruptcy.

Her son was planning to buy a house and would not file for bankruptcy. As a result, he had to pay the outstanding balance of $28,000.00 for him to maintain his good credit rating.

Should you receive a supplementary card without your prior approval, it would be prudent for you to weigh the risks and decide to use it or to reject it by simply returning it to the credit card company.


Adam Aspilla is a Senior Financial Counselor of the Debt Clinic of Canada Inc. and the author of the book, You Can Negotiate All Your Debts. He also writes a biweekly column, “What Matters In Life” in “Taliba Newspaper. For free initial, professional and confidential consultation, please call 905-306-7572.