A Basic Guide to Supplementary Credit Cards

Supplementary credit cards can be very useful to consumers as they allow cardholders to share the benefits while also reducing their costs, by paying just one annual fee. However, supplementary cards can also be very risky if not used correctly. Read our guide to learn more about supplementary cards and how to use them effectively.

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What Is a Supplementary Credit Card?

Supplementary cards, also known as add-on cards, are additional credit cards that the primary cardholder can apply for and distribute to family and friends, in some cases. They can be attractive options since these cards usually have the same rewards system as the primary card, but not typically incur additional fees. Card issuers that do charge fees for supplementary cards levy fairly low (Rs. X - Rs Y) fees. Supplementary cards are also very easy to acquire, if you currently have a credit card you are most likely eligible to apply. These cards are traditionally reserved for family members of primary cardholders. The cards rewards system is usually the same which is great for cards that offer high rewards and solid benefits.

To apply for these supplementary cards, you will be asked to either fill out a physical application and provide a certain set of documents or fill out an online application, while still submitting certain documentation. These documents may include:

  • Supplementary card applicant’s Permanent Account Number (PAN) card (photocopy)
  • Form 60 & proof of ID
  • Photocopy of the supplementary card applicant’s proof of address
  • Photocopy of the supplementary card applicant’s proof of ID

For some credit cards, cardholders may be eligible to earn additional rewards per successful supplementary card application. For example, some American Express credit cards offer additional rewards in terms of Amazon vouchers for added cards onto an account.. Further, supplementary cards are typically free (i.e. no annual fee) and only some incur a low annual fee. If you are interested in applying for multiple supplementary cards, it is important to read the terms for your specific credit card to see whether you are eligible for multiple cards. Typically, credit cards in India allow up to at least 2 supplementary cards.

How to Use the Cards

Supplementary cards are useful because they allow the primary cardholder to accumulate more rewards while sharing the perks and promotions of the credit cards to their friends and family. Most banks will provide the supplementary cardholders with the same rewards rates and general perks as the primary cardholders; however, airport lounge benefits are not always offered to supplementary cardholders.

The primary account holder is responsible for all cards associated with the account. For example, primary cardholders are in charge of making monthly credit card payments and are required to monitor the accounts as they are liable for all transactions made through the supplementary cards. On a positive note, the primary cardholder can also place limits for the supplementary cards to reduce their spending amount, a helpful feature for parents giving cards to their children. It is also important to note that all credit card transactions are listed on the primary cardholder's account as the bank will treat the cards as one account. This makes it easy for the primary cardholder to monitor all of the spending associated with the account.

Sharing the Card With a Spouse or Child

Shared family credit card usage is a key reason for many primary cardholders applying for supplementary cards. When the card is offered to the primary cardholders spouse, the rewards and benefits are shared with the same limits. Usually there is no joining or application fee for these cards, so it is one way to get your spouse a credit card to use.

For the primary cardholders' children, supplementary cards are a handyoption as the students can acquire a credit card without bearing the financial liability or risks that credit cards entail. For the parents, it works out well because they can monitor their child's expenses closely as a family. This is especially useful during emergencies. Further, the feature of limiting spending on supplementary credit cards is very useful for parents.It is important to monitor supplementary cardholders' spending carefully, because irresponsible spending can lead to debt and a poor CIBIL Score for the primary cardholders.

Benefits and Drawbacks

Supplementary cards are very useful and come with multiple benefits; however, it is imperative to be aware of the drawbacks as well. For example, the primary cardholder has a better chance reaching the minimum spend requirements to waive the joining and annual fees, as well as accumulating rewards on the account. Having multiple cards boosts earnings without much maintenance, as the statements are consolidated under the primary cardholder's account—a key benefit of supplementary cards.

However, supplementary cards have their downsides too. The entire liability is on the primary cardholder, therefore, whoever the supplementary cards are given to must be trustworthy and financially responsible. Further, supplementary cardholders may accidentally max out the credit limit of the card—putting the primary cardholder in a tough financial position. The primary cardholder is also responsible for the payments at the end of the month, which is another added responsibility.

Therefore, the ideal mindset to have when considering a for a supplementary is to find a card that does not cap earned rewards , and to only give supplementary cards to trustworthy and financially responsible individuals, while monitoring their spending closely.

Sahmi Chowdhury

Sahmi is a finance graduate from Northeastern University. He has had experience in the financial services sector working at Brown Brothers Harriman in trade settlement and True Capital Management as an investment analyst prior to joining ValueChampion.