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Difference between Joint Account and Authorized User
The banking industry's transition has simplified not just operations but also access to money, which is a welcome development. The type of bank account that a person opens may be determined by their needs and preferences. If two or more people share an account, for instance, they will each have access to the funds held by the other account holders. Account sharing grants authorized users access to another user's account.
While a joint account and an authorized user's account may seem identical at first glance, there are significant differences between the two when it comes to credit reporting and account responsibilities.
What is a Joint Account?
A joint brokerage or joint bank account is one that is held by two or more people who know and trust one another, such as business partners, spouses, family, or close friends. This can include both permanent and short-term accounts, such as those opened to meet the needs of a specific situation and then closed afterward.
Joint account holders are individually responsible for all costs associated with the account's maintenance, including but not limited to any and all applicable fees, charges, and payments. Many types of accounts, including those associated with credit products like mortgages, lines of credit, credit cards, and credit accounts, as well as financial assets like checking and savings accounts, can be held jointly by two or more people.
To avoid any misunderstandings, opening a joint account should be done face-to-face so that full authorization may be secured from both sides.
Having a joint account may be helpful in many ways.
They allow account holders to gain access to account benefits that would be impossible for a single account holder to achieve on their own, such as credit facilities.
It simplifies the process through which a couple can pool their resources and pay their rent, mortgage, or other bills.
Some of the negatives, however, include the following −
When one party, such as a spouse, has difficulties keeping their spending habits under control, the unfettered access to cash by the parties may have an influence on all of the other parties.
It is agreed that all parties would contribute equally to the total expenditures and expenses.
If a citizen owes money to the government in the form of bank taxes or child support, the government can seize those cash.
Who is an Authorized User?
An authorized user is someone who is given access to a credit card but is not held responsible for any charges made on the card. This person also cannot make any changes to the account and has limited access to the account's credit report. Account fees and balances are only two examples of the details that may be viewed by authorized users. They can also challenge their charges and make payments. Users, however, are unable to make changes to the account such as changing the PIN or address, requesting a new interest rate or credit limit, adding an additional authorized user, or closing the account.
Late payments may affect an authorized user's credit score, but they are not accountable for credit card debt or account charges. An authorized user may be added to an existing account at any time, regardless of the individual's credit history.
Similarities − Joint Account and Authorized User
Both users utilize their own individual credit cards.
Both parties have the ability to make changes to the accounts.
Differences − Joint Account and Authorized User
The following table highlights how a Joint Account is different from an Authorized User −
| Characteristics | Joint Account | Authorized User |
|---|---|---|
Definition |
A joint account is a brokerage or investment account held jointly by two or more people. People who are trusted and comfortable enough with one another to share financial matters and do so in the form of a joint account. |
A person who is an authorized user of a credit card is one who is permitted under the cardholder's terms to use the card but who is not personally responsible for paying any charges made using the card. |
Importance |
Joint account holders are individually responsible for all costs associated with the account's maintenance, including but not limited to any applicable fees, charges, and payments. |
Authorized users are not responsible for anything linked to the account other than contesting charges and paying payments. |
Components |
When two people open a bank account together, each of them gets full access to the funds in it. |
Authorized users cannot do actions such as altering the account's PIN or address, adding a new authorized user, requesting a change to the account's interest rate or credit limit, or canceling the account. |
Conclusion
A joint account is a brokerage or investment account held jointly by two or more people. People who are trusted and comfortable enough with one another to share financial matters do so in the form of a joint account. All funds in a joint account are accessible to both account holders, and both account holders are responsible for any and all fees, charges, and payments that arise from the account's use.
An "authorized user" is someone who has access to a credit account but isn't responsible for the payment of any bills that are incurred via the use of a credit card. They have limited access to the account, and their responsibilities are limited to disputing charges and making payments. Though both types of accounts facilitate monetary exchanges between parties, the ideal form of account is determined by the arrangement's specific goals.
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