When to Accept an Authorized User Spending Challenge

Jul 26, 2017

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Reddit user NeuralNexus posted an offer he received in the mail from Citi for his Citi AAdvantage Platinum Select World Elite Mastercard: Add an authorized user and spend $3,500 on purchases between 7/1/2017 and 9/30/2017 to get… 2,500 bonus miles.

NeuralNexus sarcastically noted “Yeah. I’ll get right on that Citi.” Lots of other users chimed in with similar mocking comments. It seems this offer isn’t too popular with the Reddit crowd. But, for those who might be less familiar with the pros and cons, let’s make a case study out of this offer in case you received this same offer or a similar authorized user spending challenge.


Better Options for Spending $3,500

For most cardholders, spending $3,500 isn’t an insignificant challenge. After the payoff of 2,500 miles, you’ll end up with a total of just 6,000 AAdvantage miles. Based on TPG’s valuations, this is worth just $84 — which computes to just 2.4 cents per dollar spent.

For everyday spending, you could do better with:

  • The Blue Business℠ Plus Credit Card from American Express (2x Membership Rewards = 3.8 cents per dollar; on the first $50,000 per year; then 1x thereafter)
  • Chase Freedom Unlimited (1.5x Ultimate Rewards when transferred to a Ultimate Rewards card = 3.3 cents per dollar)
  • Starwood Preferred Guest Credit Card from American Express or Starwood Preferred Guest® Business Credit Card from American Express (1 Starpoint = 2.7 cents per dollar)

Or, you can earn a lot more points/miles by applying this $3,500 spending toward a new credit card sign-up bonus:

  • Chase Freedom Unlimited or Chase Freedom: spend $500 within the first three months to earn $150 cash back — or 15,000 Ultimate Rewards points when transferred to a Ultimate Rewards card
  • Hilton Honors Surpass Card from American Express: spend $3,000 within the first three months to earn 75,000 Honors points
  • United MileagePlus Explorer Card: spend $2,000 within the first three months to earn 40,000 United miles
  • Starwood Preferred Guest Credit Card from American Express: spend $3,000 within the first three months to earn 25,000 Starpoints

But, What About the Card Benefits?

The Citi AAdvantage Platinum Select has a number of compelling benefits for its $99 annual fee: a free first checked bag and preferred boarding on domestic AA flights, access to reduced mileage awards, a 10% rebate on mileage redemptions and a carry-on bag even when booking AA basic economy fares. However, none of these benefits transfer to authorized users.

However, there’s a list of cards where adding an authorized user can provide outsized value. One of the best is the Citi AAdvantage Executive World Elite Mastercard, where you can add up to 10 authorized users for free and each can use American Airlines’ Admiral Clubs.

Downsides of Adding an Authorized User

First, there’s the obvious: The authorized user can make purchases on your card that you’re obliged to pay. So, you’re going to want to trust someone before adding them as an authorized user.

Additionally, as Citi reports card activity to authorized user credit reports, the person added as an authorized user could have this new card count against them in future applications.

When It Could Make Sense

Taking advantage of this offer could make sense in a couple rather narrow situations. First, if you’ve got a long and positive credit history on this card and you have a (trusted) friend or family member who needs help building credit, you could add them as an authorized user on this card. While you’d still need to spend $3,500 to get the 2,500 bonus miles, at least this bonus is better than getting nothing for adding an authorized user. And, you’re helping your friend or family member toward better credit while doing so.

Second, if you have a lot of American Airlines spending coming up, you could use this challenge to get up to 2.7 AA miles per dollar spent. The Citi AAdvantage Platinum Select earns 2x AA miles per dollars spent on AA purchases (including buying miles) and this 2,500 bonus miles for a $3,500 spend would get you the other 0.7 miles per dollar spent. With that said, it’d still be better to put these purchases on high-earning travel credit cards like the The Platinum Card® from American Express (which earns 5x on airfare) or the Chase Sapphire Reserve or Citi Prestige (which each earn 3x points on airfare/travel).

If you fall into one of these categories and want to check if you’re targeted, navigate to www.citi.com/authorizeduser, log in to your Citi account and see if there’s an offer mentioned in the authorized user webform. If there’s no notice about a bonus, assume that you aren’t targeted.

Bottom Line

It seems banks are issuing more bonuses for adding authorized users paired with a spending challenge. It’s important to do the math to see if the offer makes sense for your situation — or if you could do better putting the spending on another card.

Keep in mind that adding someone as an authorized user can help build their credit, but also can prevent them from getting certain cards in the future. And, make sure to check whether the card’s benefits would transfer to the authorized user or not.

Featured image courtesy of Getty Images.

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