Dubai: With the emergence of credit cards, taking on credit is not all that bad an idea any more. While you would know what a credit card is, there is a good possibility that you don't know much about supplementary credit cards.
So what is a supplementary credit card? It is an add-on card tied to an existing account, meaning it’s an additional credit you can get on your existing credit card. This allows the primary cardholder to extend their credit card benefits to others, while still having full control of how much they can spend.
When you ask the bank to issue a supplementary credit card on the basis of your own credit card (primary card), you can pass the supplementary credit to any family member like your parents, spouse, and children who are over the age of 18 years and the like.
Get 3 to 5 supplementary cards at a time?
And, the number of supplementary credit cards which you can apply for varies from bank to bank, but it's usually in the range of three to five. Irrespective of the number of cards you take based on the primary card, to give to your family members, the bank will treat all the accounts as a single account.
So, if your primary card limit is Dh20,000, each supplementary card you apply for will have the same limit. In a way, if you have one supplementary card, the Dh20,000 gets divided between your primary card and the supplementary card you give to your family member.
A key upside is that the primary card member has the option to not let the supplementary card have the same limit, instead allow a lower sub-limit on the supplementary card. So, if your primary card has a limit of Dh20,000, you can set the supplementary card limit to say Dh5,000.
What are the key benefits of these cards?
“Supplementary cards work very well when you want to give them to your aged parents or adult children who are financially dependent on you (like students). The best part is you can track their spending and also set the sub-limits as a primary card holder,” explained Rupesh Naish, a credit consultant based in Dubai.
The additional cardholder generally gets to enjoy all the benefits of a debit or credit card account without any liability, which remains the responsibility of the primary cardholder. Now, is a supplementary credit card an effective tool in improving a poor credit score?
“Even though a supplementary credit card has a name on it and a unique number, as an authorised user, card activity won't go towards building your credit score. That said, the primary cardholder's credit score could be affected by the actions of their authorised user – for better or worse,” said Naish.
What other benefits does the card have?
The benefits of using supplementary cards are same as the features you have on your primary credit card. Which means, a supplementary card can be used both in your residing country and abroad, when it comes to shopping offline and online.
“The supplementary cards can also be used at an automated teller machines (ATMs) to withdraw cash as well. But, a few banks do offer supplementary cards with fewer benefits or features as well, with swipes also getting the same reward points as your primary credit card,” added Naish.
“In fact, you will get a single account statement being the primary card holder and hence you get to know the details of the supplementary card holder's transactions. This works especially if you want to give your supplementary card to those whose spending patterns can be monitored.”
Even though a supplementary credit card has a name on it and a unique number, as an authorised user, card activity won't go towards building your credit score
Are there costs involved for these cards?
“Most credit cards offered come with supplementary options. Some have no annual fees while others do, maybe even waived with a set number of swipes in a year or month – either way they are all costs we could certainly do without,” said Rajesh Markara, Abu Dhabi-based independent credit consultant.
“Nevertheless, the cost you will have to bear for supplementary cards will vary from bank to bank. Some banks may offer up to three supplementary cards free. Others may charge between Dh10 to Dh50 while others may ask you to pay a joining fee as well.”
The most important things to know about supplementary cards is that since you are the primary holder of the card, it's your responsibility to take care of the dues, since it's a single account. Also, know that the supplementary cards are also mentioned on your individual credit report.
Key takeaways
Supplementary credit cards are different across the board and vary from different issuers, some have identical perks whilst others have limited benefits when compared to the principal card. Similarly, annual fee structures on supplementary cards will be different from the principal.
“Some banks offer the same benefits on your additional card as your primary credit card while others might offer fewer features. However, there are several banks that provide some added benefits to supplementary credit cards as well,” added Markara.
While a few banks charge a fairly low joining fee to issue a supplementary credit card, most of the banks provide this service for zero joining fee. Besides, you will not require paying any additional annual fee or maintenance charges on your card.
Also, your annual fee on a primary credit card will not be affected by this in any way. “If you’re having doubts about managing the principal and supplementary credit cards, have a go at the regular ones instead – you might find one that the two of you can take up individually,” Markara said.
