Add-on credit card: The liability of repayment is on the primary cardholder

The new RBI directions on credit cards highlighted that add-on credit cards must be issued with a clear understanding that the liability will be that of the principal or the primary cardholder. 

Add-on credit cards are supplementary credit cards that are issued against a primary credit card. Say, you have a family member who is not eligible to obtain a credit card. You can go for an add-on card in the name of that family member. The overall credit limit will remain the same for the primary as well as the add-on card put together. That is, the add-on credit card holder can just share the credit limit with the primary cardholder without any extra credit limit. 

A single consolidated credit card statement including the transactions made on the add-on card will be issued to the primary cardholder. “The consolidated statement will include all the payments, purchases and other credit and debit transactions along with the summary of reward points earned on the primary as well as add-on card,” said Sachin Vasudeva – Head of Credit Cards, Paisabazaar.com.

Thus, the primary cardholder is responsible for the payment of dues incurred on the add-on card. “In case there is an unpaid balance on the add-on card, the charges incurred for the same will be reflected in the primary cardholder’s statement and will affect his/her credit score. Hence, add-on cards should also be managed with discipline and all dues should be cleared on time to avoid finance charges,” added Vasudeva.

The add-on credit cards, usually, come free of cost. For example, card issuers such as SBI Card and ICICI Bank offer this supplementary card with no additional fee. However, finance charges, cash advance fees, late payment charges, over-limit charges, etc will continue to be applicable. Giving an example, Vasudeva said when only the minimum amount due on the add-on credit card is paid, it will attract finance charges on the outstanding amount. In such a case, just like primary credit cards, new transactions made on the add-on card will also be ineligible for the interest-free period and incur finance charges from the first day. 

Fees and charges on add-on credit cards vary from one issuer to another; card users must check the applicable charges before applying for an add-on card.

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