Misconceptions about financial instruments like Credit Cards often lead to big mistakes, adversely affecting our financial health. Some of the most common myths and misconceptions are around add-on Credit Cards. These misconceptions are due to lack of reliable and credible information related to these products. Moreover, every bank has its own rules and regulations related to add-on cards which make it more difficult for a genuine user to understand things clearly.
What are add-on cards?
An add-on credit card (Supplementary credit card) is an additional credit card that can be issued against your primary credit card. With an add-on credit card, you can share all the benefits of your existing card with your loved ones. This card can be issued for your parents, spouse, siblings or your children who are above 18 years of age. Only a limited number of supplementary credit cards can be issued, depending upon the terms and conditions which differ from bank to bank.
All offers and special privileges associated with the primary credit card are valid for all add-on credit cards. The credit limit of these cards is, however, less than or equal to the maximum credit limit of the primary credit card. The credit limit of these cards can be regulated and each card can have a different credit limit as per the primary card holder’s wish. However, special privileges and offers associated with the primary credit card cannot be regulated for add-on cards. Each and every add-on card holder enjoys the same benefit as the primary card holder.
However, there are quite a few misconceptions around add-on Credit Cards and its usage. Here are the most common supplementary card related myths to watch out for:
Myth 1: Add-on credit cards always have add-on fees
Mostly, banks tend to issue add-on cards under your primary card for free. It is only in rare cases that the bank levies a small fee for them. Sometimes, a certain number of add-on cards are issued for free and the bank charges for anything over that. Most banks issue add-on cards free of cost and do not charge any amount for availing facilities of these cards.
Examples of credit cards which have no add-on card charges include HDFC credit card (Moneyback), Axis credit card (MyZone), Citi credit card (Rewards) and Standard Chartered credit card (Platinum Rewards).
Myth 2: Add on card come with an additional limit
An add-on card gets a shared credit limit with your primary card. However, card holders can also set the spending limit of the add-on card as per their needs. The set limit of the add-on cards must be equal to or less than the total limit of the primary card.
Suppose, a card holder has four supplementary cards with a credit limit of Rs 1 lakh on the primary card, then the limit will be distributed across the add-on credit cards. Sub-limits can also be set for each card separately.
Myth 3: Any family member or friend can get an add-on card
Only close family members (parents/spouse/siblings) and children who are above the age of 18 are eligible for getting an add-on credit card. Though, it’s a common misconception that your girlfriend/boyfriend or your fiancé could get it, but it is not legal according to current banking norms. Even your teenager child who is below the age of 18 is not eligible for an add-on card.
In such cases, usage of prepaid cards, gift cards and other elements are the best alternatives to an add-on credit card.
Myth 4: Add-on Cards won’t get deactivated once the primary card is blocked
In case the primary card holder is not able to repay the amount or defaults a lot on repayments, the bank has the authority to block the card. In that case, the primary card as well as add-on cards is liable to be deactivated by the bank until further response is initiated by the primary member.
However, in case the primary card holder requests for blocking the card when it is either lost or stolen, the associated add-on cards do not get deactivated and continue functioning as usual. In case the primary user asks for the replacement of the card when it gets damaged, the add-on cards still do not get deactivated.
Myth 5: Add-on Cards cannot be used in foreign countries
Most people believe that add-on cards are rendered useless in foreign nations, i.e. making transactions outside the country where the card is issued is not allowed. However, it completely depends on the attributes of the primary credit card. If the issuing bank allows for the usage of the primary credit card abroad, then the add-on card can also be used outside the home country.
In some cases, banks limit the usage of add-on cards in some specific countries. But in such cases, even primary cards cannot be used in those countries.
The bottom line…
It is crucial to understand the basics of an add-on card before applying for it. Nowadays, with the focus us on digital payments, it’s all the more important to know which credit card issuer provides good benefits on add-on cards as well. It’s important that while the primary card offers great rewards and benefits program, the add-on card is not far behind. To know whether you are applying for the right card, you can check out numerous personal finance marketplaces.
Add-on cards are an ideal solution to provide a degree of financial independence to your dependant parents or children. You can track their expenditure and also set the sub-limit according to their usage. But the onus is completely on you to clear the dues on time otherwise your credit score may take a dip. An authorised user cannot be held liable for any payment defaults therefore, it is necessary that add on cards should be given to only trustworthy people who know how to use a credit card responsibly. Under ideal conditions, you should set aside the equivalent of the shared amount beforehand so that when it comes to repaying your bills, you can use it to clear the dues easily.
Using add-on cards is very easy and it makes the life of your loved ones easier. If you can maintain and manage your finances properly, your family can enjoy the services of add-on cards without any hassle.
