Building credit isn’t easy. Many lenders simply don’t want to risk extending credit to someone with no history of repaying credit.

Applying for a secured credit card or credit builder loan are two potential options for establishing credit, but you may also be interested in the concept of “piggybacking” credit. Piggybacking credit is when someone adds you as an authorized user on their credit card to help boost your credit.

In this article, we’ll run through the basics of credit card piggybacking, from who can help you do it to whether it’s a good idea in the first place.

Does piggybacking credit actually work?

Piggybacking credit could result in a small credit boost, but it doesn’t always work as planned.

Your credit card activity may not end up on your credit reports

It’s frustrating, but not all credit card companies report authorized users’ activity and those that do may not report it in a predictable way.

In some cases, your responsible spending as an authorized user will end up on the main cardholder’s credit reports but not on your own. To avoid this, consider calling the credit card company ahead of time to ask how they will report your credit activity as an authorized user. They might not disclose this information, but it’s worth asking.

Piggybacking with an irresponsible cardholder could do more harm than good

You’ll only want to be added to a card as an authorized user if the account is in good standing. If your scores end up negatively impacted due to being an authorized user on someone else’s credit card account, don’t hesitate to take action. Consider calling the credit card company and asking to have your name taken off the account. And then you may want to contact the credit bureaus to request the account be removed from your credit reports.

Two types of credit card piggybacking

Credit card piggybacking typically involves reaching out to a parent, relative or close friend, but this isn’t always the case.

Traditional piggybacking

Traditional piggybacking works essentially in the way we’ve outlined above. You find a trusted friend or relative to add you as an authorized user, and their card’s payment history begins to show up on your own reports (assuming the credit card company reports authorized users’ credit activity to the credit bureaus).

For-profit piggybacking

And then there’s for-profit piggybacking. This is when a company can help someone piggyback as an authorized user on other someone else’s credit card. In many cases, these people are strangers to one another and are paired up. The company typically charges a fee for facilitating this connection.

For-profit piggybacking can be a risky endeavor. We generally don’t advise being added as an authorized user unless you can trust the primary account holder; if you’re dealing with a stranger and a for-profit company, that trust might be harder to come by.

Potential risks of for-profit credit piggybacking

There’s also the question of whether it’s worth it in the first place. Starting with its FICO® Score 8, FICO has attempted to discourage for-profit credit piggybacking with a scoring model that “substantially reduces any benefit of so-called tradeline renting.” It’s possible that newer and yet-to-be-released credit-scoring models may incorporate ways to further disincentivize this practice.

For-profit piggybacking could also leave you more vulnerable to ID theft, depending on how the company uses and protects your data.

Bottom line

If you’re building credit from scratch, consider taking other steps before committing to piggybacking as part of your strategy. You could have a parent or close friend co-sign a loan, apply for a secured credit card, apply for a credit builder loan or even try to get your rent payments reported to the credit bureaus. And maybe most importantly, be sure to treat any new credit accounts you open responsibly.

Updated November 12, 2024

This date may not reflect recent changes in individual terms.

Editorial Note: Intuit Credit Karma receives compensation from third-party advertisers, but that doesn’t affect our editors’ opinions. Our third-party advertisers don’t review, approve or endorse our editorial content. Information about financial products not offered on Credit Karma is collected independently. Our content is accurate to the best of our knowledge when posted.

Written by: Andrew Kunesh

Pros

• Good sign-up bonus
• No blackout dates for flight redemptions
• Points can often be redeemed at a high value on flights
• Annual points bonus adds value just for keeping your account active

Cons

• $69 annual fee
• 3% foreign transaction fee
• Rewards rate is low for most purchases

What you need to know about the Southwest Rapid Rewards® Plus Credit Card

The sign-up bonus could be lucrative

The Southwest Rapid Rewards® Plus Credit Card offers a $400 statement credit and 40,000 bonus points after you spend $3,000 on qualifying purchases within the first 4 months after your account opens.

The value of Southwest Rapid Rewards points depends on which flights you choose when redeeming your points. If you’re able to find the right flights, you could use your bonus points for multiple round-trip flights around the U.S.

Some might find this to be a lucrative sign-up bonus. But make sure the minimum spend requirement is within your budget.

You’ll earn more bonus points every year

Each account anniversary year, Southwest Rapid Rewards® Plus Credit Card members receive a bonus of 3,000 Rapid Rewards points to their account, which can be used like any other Rapid Rewards points you earn. That’s a nice gift just for keeping your account open every year.

Earning points on purchases

Like many airline credit cards, the Southwest Rapid Rewards® Plus Credit Card has somewhat limited points-earning potential. You’ll earn two points for every $1 you spend on Southwest purchases as well as purchases with Rapid Rewards hotel and car partners.

Plus you’ll earn two points for every $1 you spend on local transit and commuting, including ride-sharing. You’ll also get two points for every $1 you spend on internet, cable, phone services and select streaming. You’ll earn one point per $1 spent on all other purchases.

Foreign transaction fees could limit your spending to the U.S.

The Southwest Rapid Rewards® Plus Credit Card charges a 3% fee on all foreign transactions, which many may consider a downfall. So if you think you might travel abroad or make purchases outside the U.S., we recommend looking for a card that doesn’t charge foreign transaction fees, which could save you some serious cash.

The annual fee could eat into your rewards value

The Southwest Rapid Rewards® Plus Credit Card charges a $69 annual fee. While that ranks as the lowest annual fee for any of Southwest’s credit cards, it still could cut into your rewards value if you only fly Southwest occasionally.

Consider how often you’re likely to use your card for Southwest purchases and how often you’ll redeem those points for Southwest flights. If you tend to fly multiple airlines, you might get better value from a more versatile travel card, even if it has a higher annual fee.

Understanding your points and redemption options

The Southwest Rapid Rewards® Plus Credit Card earns Southwest Rapid Rewards points that can be used toward Southwest flights.

How far your points will get you is based on a number of factors, including destination, time of day and demand. That means the value of these points varies depending on which flights you choose.

Southwest Rapid Rewards used to be one of the most valuable rewards programs in the industry. But according to our summer 2023 point valuations, these Rapid Rewards points are worth an estimated 1.35 cents per point.

You can use your points for any Southwest-operated flight, with no blackout dates — so it’s just a matter of whether you have enough points to cover the relative cost of the flight you want.

You can also redeem Southwest Rapid Rewards points for things like hotel stays, car rentals and gift cards. You can check Southwest’s redemption portal to see if these provide the best value for your travel plans.

Who this card is good for

This card may be best for loyal Southwest flyers who want to redeem points for free flights on the airline throughout the year. While you can find higher rewards rates on other Southwest cards, the ability to earn Rapid Rewards points on every purchase and get 3,000 bonus points per card anniversary year could get you closer to your next Southwest flight redemption.

Frequent Southwest Airlines flyers might find they’d earn more rewards and benefits from the airline’s other cards. The Southwest Rapid Rewards® Premier Credit Card is the next step up with a $99 annual fee. And the Southwest Rapid Rewards® Priority Credit Card offers the most opportunity to earn rewards and get additional features, although you’ll have a higher annual fee at $149.

Not sure this is the card for you? Consider these alternatives.

• Southwest Rapid Rewards® Priority Credit Card: This card could be the right choice for super-frequent Southwest flyers.
• Chase Sapphire Preferred® Card: This card is good for travelers who want versatility when booking their trips.

Updated November 12, 2024

This date may not reflect recent changes in individual terms.

Editorial Note: Intuit Credit Karma receives compensation from third-party advertisers, but that doesn’t affect our editors’ opinions. Our third-party advertisers don’t review, approve or endorse our editorial content. Information about financial products not offered on Credit Karma is collected independently. Our content is accurate to the best of our knowledge when posted.

Written by: Andrew Kunesh

Pros

• No blackout dates for flight redemptions
• Four boarding group upgrades per year, when available
• Annual point bonus and Southwest travel credit
• Ability to earn points toward A-List status
• Generous sign-up bonus available

Cons

• Costly annual fee
• Only right for frequent Southwest Airlines travelers, as others may not take full advantage of the card’s benefits

The Southwest Rapid Rewards® Priority Credit Card is loaded with features for frequent flyers

The Southwest Rapid Rewards® Priority Credit Card has numerous features aimed at Southwest flyers chasing the airline’s A-List status. The card also offers the chance for all flyers to earn extra miles and flight credits annually.

Here’s a quick look at the Southwest Rapid Rewards® Priority Credit Card’s most standout features — and one notable drawback.

4 upgraded boardings per year

Unlike travelers on many airlines, Southwest flyers only get to pick their seats once they’re already on the plane. If you board late, you may get stuck in a middle seat or be forced to sit apart from your traveling companion. Worse yet, there might not be any room for your carry-on bag in the overhead bins.

Thankfully, when you use the Southwest Rapid Rewards® Priority Credit Card, you will receive a statement credit for the purchase of up to four upgraded boardings each account anniversary year. The upgrade allows you to board in positions A1 to A15 — the airline’s top boarding group. You can purchase an upgraded boarding online (within 24 hours of your flight) or at the departure gate or ticket counter (on the day of travel only), when available.

Earn tier qualifying points toward A-List status

A-List status is Southwest’s version of airline elite status, with benefits including priority boarding and check-in. Traditionally, this status is earned by accruing 35,000 tier qualifying points or flying 25 qualifying one-way Southwest flights in a calendar year.

The Southwest Rapid Rewards® Priority Credit Card gives frequent Southwest flyers a way to speed up the A-List qualification process: Cardholders earn 1,500 tier qualifying points for every $5,000 in purchases with no limit on the number of qualifying points you can earn.

$75 travel credit and 7,500 bonus Rapid Rewards® points per year

Cardholders get two annual benefits: a $75 Southwest annual travel credit and 7,500 bonus Rapid Rewards® points, which are awarded each cardholder account anniversary.

When you use your Southwest Rapid Rewards® Priority Credit Card for purchases (excluding upgraded boardings and in-flight purchases) the travel credit will be automatically applied to your account, and the 7,500 bonus points can be redeemed like any other Rapid Rewards® points.

The sign-up bonus brings real value

If you don’t like to wait for perks, you’ll probably want to take advantage of the Southwest Rapid Rewards® Priority Credit Card’s sign-up bonus. You’ll earn a $400 statement credit and 40,000 bonus points once you spend $3,000 on purchases in the first 4 months your account is open.

Rewards

With this card you’ll earn …

• 3 Rapid Rewards® points per $1 spent on purchases made directly with Southwest Airlines
• 2 points per $1 spent with participating Rapid Rewards® hotel and rental car partners
• 2 points per $1 spent on local transit and commuting
• 2 points per $1 spent on internet, cable, phone services, and select streaming services
• 1 point per $1 spent on all other purchases

What else you need to know about the Southwest Rapid Rewards® Priority Credit Card

The Southwest Rapid Rewards® Priority Credit Card has additional features worth mentioning for Southwest loyalists. Here’s a quick look.

• There’s no foreign transaction fee, so you can use your credit card abroad without worrying about the 1% to 3% fee that some other cards charge.
• The card offers a 25% statement credit on in-flight purchases of drinks and Wi-Fi.

Understanding your points and redemption options

The Southwest Rapid Rewards® Priority Credit Card earns Southwest Rapid Rewards® points that can be used for a variety of redemption possibilities.

As with many airline rewards programs, your Rapid Rewards® points can be used to buy flight tickets. Because the prices of airline tickets fluctuate, the value of Southwest Rapid Rewards® points also varies.

But the good news is that you can use these points for any Southwest-operated flight. This means you won’t need to adjust your plans — just book the flight you want with no blackout dates.

You can redeem Southwest Rapid Rewards® points for hotels, car rentals, merchandise and gift cards — but at a less favorable rate. Gift card redemptions generally hover around 1 cent per point or below and should be treated as a last-ditch option for redeeming points.

Who this card is good for

The Southwest Rapid Rewards® Priority Credit Card is great for frequent Southwest flyers. Having the ability to earn points toward A-List status means that you can earn this status more quickly with less flying. Additionally, the statement credit for four upgraded boardings makes it easy for Southwest flyers to secure a better seat and overhead storage space on their way toward A-List status.

However, this card isn’t our top pick for less-frequent travelers. If you only fly Southwest once or twice a year, the upgraded boardings benefit may go to waste. Likewise, the ability to earn extra points toward A-List status is only a worthwhile benefit if you’re already chasing Southwest elite status.

Not sure this is the card for you? Consider these alternatives.

• Southwest Rapid Rewards® Plus Credit Card: This card could be the right option for those who travel less frequently and who are still loyal to Southwest Airlines.
• Chase Sapphire Preferred® Card: This card could be more attractive to frequent travelers who aren’t loyal to one airline.

Global Entry can be a useful way to expedite your airport security and customs experience — but it’s going to cost you.

Global Entry could be a path toward a more convenient, faster travel experience when entering the United States. Not only does the service give you the same access to speedier security screening at U.S. airports as TSA PreCheck does, but it also offers faster entry into the United States at major U.S. airports.

But it costs $120 every time your apply for Global Entry application or a renewal, and membership must be renewed every five years. The good news is that you may be able to cover the cost with a premium travel credit card or membership in an airline rewards program.

In this article, we’ll show you what Global Entry does, how to apply for it and how to pay for it in the most efficient way.

• What is Global Entry?
• How to apply for Global Entry
• A few ways to cover the cost of Global Entry

What is Global Entry?

Global Entry is a U.S. Customs and Border Protection program that gives eligible travelers an expedited airport security and customs experience. When enrolled in Global Entry, members get to use dedicated inspection lanes at customs in major U.S. airports.

Global Entry members typically do not have to fill out paperwork when they land and can skip standard processing by using an automated kiosk to scan passports and fingerprints.

Global Entry also includes a “known traveler number” for use on airline reservations and boarding passes. This ID number gives you access to TSA PreCheck lanes at airports in the U.S., allowing you to move through security screening without having to take off your shoes, remove liquids and gels 3.4 ounces or less from your bags, or place your laptop in a separate container.

Add up the benefits of Global Entry and TSA PreCheck, and travelers can typically look forward to shorter wait times at security checkpoints for both domestic and international flights.

How to apply for Global Entry

Getting Global Entry requires going through a multistep application process and — if all goes well — being approved by U.S. Customs and Border Protection. Thankfully though, the process is a relatively simple one.

First, you’ll have to make sure you’re eligible to become part of the Global Entry program. U.S. citizens, permanent residents and citizens of certain countries are eligible to apply. It’s also worth noting that those under 18 years old must apply separately from a parent or legal guardian, albeit with their approval.

If you’re eligible for Global Entry membership, you can create an account and apply via the agency’s Trusted Traveler Programs website. This application will ask for basic personal information like your name and address. You will also be asked to pay the $120 fee when you submit your application.

U.S. Customs and Border Protection will then review your information and email you with a preliminary decision. If you’re conditionally approved, you will be asked to schedule an in-person interview at a Global Entry enrollment center. These centers are often located at international airports and local customs and border protection offices.

For this interview, you’ll be required to bring a valid passport and another form of identification. Additionally, lawful permanent U.S. residents are required to bring their permanent resident card.

If approved, you should receive your Global Entry card by mail. You’ll still need to bring your passport with you when you travel internationally, but you can use the Global Entry card to cross at land and sea ports of entry into the United States.

A few ways to cover the cost of Global Entry

Global Entry costs $120 for a five-year membership, which is $35 more than a TSA PreCheck membership for the same amount of time. But there are ways to cover the cost of the application fee through your credit cards or rewards programs.

One potential way to get a Global Entry fee reimbursement is through a premium travel credit card. In many cases, these cards will automatically reimburse your application fee through a statement credit, so you don’t even have to request to receive the money back.

Each of the following five cards features an available statement credit for Global Entry, but it’s worth checking to see if your travel card includes one as well. If you’re thinking of applying for one of these cards, you’ll also want to check out the annual fee to decide if the statement credit and other perks are enough to justify the additional cost.

Bank of America® Premium Rewards® credit card

• $100 statement credit available once every four years
• Annual fee: $95

Chase Sapphire Reserve®

• $100 statement credit for Global Entry
• Annual fee: $550

Citi® / AAdvantage® Executive World Elite Mastercard®

• $100 statement Global Entry credit available every five years
• Annual fee: $595

Platinum Card® from American Express

• $120 statement credit for Global Entry available every four years
• Annual fee: $695

United℠ Explorer Card

• $120 statement credit available every four years
• Annual fee: $0 intro, then $95 after first year

Next steps

If the $120 price tag of a five-year Global Entry membership seems too steep, then consider covering the cost with a statement credit from a premium travel credit card. Before applying for a new card though, decide whether Global Entry and any other rewards the card offers are worth the annual fee.

So you’ve renewed your passport, booked airfare and secured your hotel. The next item on your list? Getting local currency so you can experience the local life.

But chances are you won’t get the best deal on your currency exchange by using the airport cash desk. It may be convenient, but it could also mean extra fees and subpar exchange rates compared to other options.

We’ll break down your choices and arm you with info that can help you get the most for your dollar when exchanging currency on your next trip, so you can enjoy life abroad that much more!

What kinds of fees do currency exchanges charge?

Currency exchanges both at home and abroad may charge you more than the real exchange rate. For example, Travelex — one of the world’s most popular exchanges — listed the exchange rate for the Euro at $0.7799 at the time of writing this article. The real exchange rate was about $0.8554 per $1 converted, according to XE Exchange.

This may sound like a small difference on paper, but the more money you convert, the more it can add up. For example, if you exchanged $1,000 at Travelex for the rate above, you’d pay a 75.50 euro fee because of the exchange rate.

The best alternatives to the airport currency exchange

Just because the airport currency exchange doesn’t give you the best deal doesn’t mean you’re stuck paying unnecessary fees to get local currency. Here are three ways you can get a better exchange rate when making purchases abroad.

Use your credit or debit card when possible

One of the best ways to get a good exchange rate abroad is by using your credit card to make purchases — as long as the card doesn’t charge foreign transaction fees.

Check your cardholder agreement — if your current card charges a foreign transaction fee, consider applying for a card from our list of cards with no foreign transaction fees.

Fees aside, using your credit or debit card is probably your safest bet for getting an exchange rate that’s closest to the market rate. But be aware that while your card’s issuer bases its exchange rate on market conditions, it does set its own exchange rate for transactions. This can be updated daily based on market rates.

Before your trip, ask your card issuer what rate it’s using, then compare it with the market rate using a currency-comparison website, like x-rates.com. And while you’re away, remember that Visa and Mastercard both have foreign exchange calculators posted online, so you can see what your total purchase price will be before swiping.

Use a local ATM (with caution)

Another way to get currency abroad is by using your U.S. debit card at a local ATM.

But be cautious when doing so — some debit cards charge out-of-network transaction fees. Call your bank before your trip to see if your card charges these fees. If so, look for a debit card that doesn’t.

If you’re not sure if your U.S. debit card will work abroad, call and ask. It’s also a good idea to let your bank know where and when you’ll be traveling in advance, to avoid a possible freeze on your card for suspected fraud. If you’re already away, look at the processor logos posted on the front or side of the ATM to see if it supports your card’s payment network (Visa, Mastercard, etc.).

Also, some ATMs charge a nonbank usage fee or provide unfavorable exchange rates. We recommend using ATMs from local or international banks, versus tourist-focused ATM companies like Euronet, for a more likely shot at the best exchange rates.

Why is this? Some tourist-focused ATMs use dynamic foreign exchange rates. This means that the ATM will show you your withdrawal in both the local currency and your home currency, allowing you to pick which currency you’d like to process your withdrawal in. Processing the withdrawal in U.S. dollars could give you a less-than-favorable exchange rate.

If you do have to use a tourist-focused ATM, we recommend choosing the local currency for your transaction.

Order currency ahead of time

One of the best and most cost-effective ways to get local currency for your destination is by ordering it ahead of time from your bank. Bank of America, PNC and other U.S. banks will exchange currency for you in-branch. We recommend pulling up XE Exchange or another online currency converter to compare their rate to the market rate.

But beware of bank fees. Bank of America, for example, charges a $7.50 delivery fee for currency orders of less than $1,000. This fee is waived for customers ordering $1,000 or more.

You should also be sure to call your bank ahead of time when ordering currency. They may not have your currency of choice on hand or could charge a fee for expedited delivery. In the case of Bank of America, this fee is $20.

Bottom line

It pays to be prepared when traveling abroad. The airport currency exchange or those near tourist city centers may advertise no fees, but often have a less-than-stellar exchange rate.

Our advice? Use a credit card with no foreign transaction fee when possible. Or get your cash as local currency from a local ATM when abroad or from your bank before your trip. If you do decide to use a currency exchange, do your research and assess the exchange rate and other fees beforehand.

As student debt continues to grow, a new report finds that colleges and universities are not making college financial aid information transparent.

College affordability nonprofit uAspire and think tank New America published a new report that shows colleges use inconsistent and often convoluted language in financial aid award letters.

The report analyzed more than 11,000 award letters from more than 900 institutions sent to nearly 6,000 different students who graduated high school in 2016.

Among the findings using a subset of 515 award letters from different institutions: The financial aid award letters included confusing jargon and terminology, incomplete cost information, and misleading packaging of Parent PLUS loans.

For example, some institutions use terms that lump grant and loan aid together. Within the subset of 515 award letters, the report found that of the 455 colleges that offered an unsubsidized student loan, there were 136 different terms for that loan, with 24 of those terms not including the word “loan” at all. Nearly 15% of the letters included federal Parent PLUS loans as an “award,” making the financial aid package appear far more generous than it actually was.

What does this actually mean?

The report found that the students who received award letters and a federal Pell Grant were still on the hook for an average of almost $12,000 in out-of-pocket expenses for the first year.

That financial aid gap persisted even when the students went to public universities or lived at home to offset some of their expenses.

And as for the loan-terminology problems described in the report, conflicting terms could lead to confusion over what is a loan and what is financial aid.

Why should you care?

Student loan debt has been on the rise in the United States for years. According to the Federal Reserve, student loan debt hit $1.5 trillion in the first quarter of 2018.

That’s part of what makes the report’s findings so worrying. Student loan debt may be leading people to put off things like buying houses or saving for retirement. But the report notes that one-third of the letters reviewed within the subset of 515 award letters didn’t state the cost of attending the school.

Even worse, only about half of those letters told students what to do to accept or deny awards. The letters that did provide next steps had inconsistent policies. Because of confusing language around how much it actually costs to attend the school and deadlines for accepting aid, students may end up accepting offers that they can’t afford or missing out on financial aid because they didn’t know the next step in the financial aid process.

What can you do?

Are you or your child deciding on a college but unsure if your financial aid awards will cover the bill? Here are a few things you can do.

• Do your own research. Read through the college financial aid packets in full. Subtract any grants, scholarships and additional aid from the school’s published tuition costs to find your total cost.
• Look for private scholarships. After determining your total cost, look for private scholarships you can apply for. You can often find scholarships through community and professional organizations.
• Start a 529 plan early. If you’re saving for a child’s college fund, consider opening a 529 college savings plan. These plans are state sponsored and, while you pay taxes on the money you contribute to the plan, you’re not taxed on its gains provided you use withdrawals for qualified education expenses.

Building credit isn’t easy. Many lenders simply don’t want to risk extending credit to someone with no history of repaying credit.

Applying for a secured credit card or credit builder loan are two potential options for establishing credit, but you may also be interested in the concept of “piggybacking” credit. Piggybacking credit is when someone adds you as an authorized user on their credit card to help boost your credit.

This method isn’t guaranteed to work, one reason being that not all credit card companies report authorized users’ activity to the major consumer credit bureaus in a way that helps them build credit. In some cases, an authorized user’s activity is only reported on the main cardholder’s credit reports, which defeats the point of piggybacking credit.

For many people new to credit, the first option for piggybacking is likely their parents, a significant other, or a close friend with good credit and responsible spending habits. But what if you don’t have those options?

In recent years, a number of for-profit credit piggybacking services have popped up. These services add consumers as authorized users to strangers’ credit cards for a price. But these services exist in an ethical and legal gray area, and some credit-scoring models, such as FICO® Score 8, have attempted to curb the benefit of what’s sometimes referred to as “tradeline renting.”

In this article, we’ll go over both kinds of credit piggybacking — the traditional kind and the for-profit kind. We’ll also run through the basics of credit card piggybacking, from who can help you do it to whether it’s a good idea in the first place.

• Does piggybacking credit actually work?
• Two types of credit card piggybacking
• Potential risks of for-profit credit piggybacking
• Looking to build your credit? Consider a credit builder loan

Does piggybacking credit actually work?

Piggybacking credit could result in a small credit boost, but it doesn’t always work as planned.

There are two main issues with credit card piggybacking, one of which involves the credit card companies and one of which involves the person adding you as an authorized user.

Your credit card activity may not end up on your credit reports

It’s frustrating, but not all credit card companies report authorized users’ activity and those that do may not report it in a predictable way.

In some cases, your responsible spending as an authorized user will end up on the main cardholder’s credit reports but not on your own. To avoid this, consider calling the credit card company ahead of time to ask how they will report your credit activity as an authorized user. They might not disclose this information, but it’s worth asking.

Piggybacking with an irresponsible cardholder could do more harm than good

It can be difficult to convince someone to add you as an authorized user. What if you spend irresponsibly and sink their credit? That’s a situation nobody — not a close friend, not even a parent — wants to take on.

But it also makes sense for you to be cautious. After all, if your credit “host” always pays their credit card bill on time, keeps their credit card utilization low and follows other good credit practices, it can reflect positively on your credit, too.

However, you’ll only want to be added to a card as an authorized user if the account is in good standing. If your scores end up negatively impacted due to being an authorized user on someone else’s credit card account, don’t hesitate to take action. Consider calling the credit card company and asking to have your name taken off the account. And then you may want to contact the credit bureaus to request the account be removed from your credit reports.

Two types of credit card piggybacking

Credit card piggybacking typically involves reaching out to a parent, relative or close friend, but this isn’t always the case. Let’s go over the most common types of credit card piggybacking today.

Traditional piggybacking

Traditional piggybacking works essentially in the way we’ve outlined above. You find a trusted friend or relative to add you as an authorized user, and their card’s payment history begins to show up on your own reports (assuming the credit card company reports authorized users’ credit activity to the credit bureaus).

Technically, you don’t even need to use the credit card yourself for piggybacking to work. It can be helpful to learn the basics of responsible credit by charging and paying off small purchases each month, but merely being listed as an authorized user on the primary user’s account means their payment history may begin to show up on your own credit reports. Again, this is only the case if the credit card company reports it as such.

For-profit piggybacking

And then there’s for-profit piggybacking. This is when a company can help someone piggyback as an authorized user on other someone else’s credit card. In many cases, these people are strangers to one another and are paired up. The company typically charges a fee for facilitating this connection.

For-profit piggybacking can be a risky endeavor. We generally don’t advise being added as an authorized user unless you can trust the primary account holder; if you’re dealing with a stranger and a for-profit company, that trust might be harder to come by.

Is for-profit credit piggybacking legal?

The companies that offer it would argue yes, but for-profit piggybacking exists in somewhat of a legal and ethical gray area.

Some companies have come under legal scrutiny over whether they’ve violated state laws with their piggybacking services.

In a word, beware.

Potential risks of for-profit credit piggybacking

There’s also the question of whether it’s worth it in the first place. Starting with its FICO® Score 8, FICO has attempted to discourage for-profit credit piggybacking with a scoring model that “substantially reduces any benefit of so-called tradeline renting.” It’s possible that newer and yet-to-be-released credit-scoring models may incorporate ways to further disincentivize this practice.

For-profit piggybacking could also leave you more vulnerable to ID theft, depending on how the company uses and protects your data. You may need to provide your date of birth, legal name, and Social Security number when applying for a piggybacking service. If you’re unfamiliar with the company or unsure of how they secure their data, it’s a risk you shouldn’t take lightly.

Looking to build your credit? Consider a credit builder loan.

Taking out a credit builder loan can help you build your credit by giving you the opportunity to show you can make regular on-time payments, which is an important part of your credit scores. 

When you get a credit builder loan, the lender typically puts the money you’ve borrowed into a reserve account it controls. You then make regular payments toward the loan, building a positive payment history that’s reported to the credit bureaus. When the loan is paid off (or you reach a certain threshold), the lender gives you access to the funds. 

Loan fees, interest and repayment terms vary among lenders, so you’ll want to compare your options before applying.

You might also want to consider Credit Karma’s Credit Builder plan, which can help you build low credit while you save.

Bottom line

Credit card piggybacking could be a way to help build credit, but it may come with some serious downsides and caveats to consider.

It’s also not a panacea. Building credit is a journey that typically involves a number of steps, and no single action is guaranteed to launch your credit scores into the stratosphere.

If you’re building credit from scratch, consider taking some of those other steps before committing to piggybacking as part of your strategy. You could have a parent or close friend co-sign a loan, apply for a secured credit card, apply for a credit builder loan or even try to get your rent payments reported to the credit bureaus. And maybe most importantly, be sure to treat any new credit accounts you open responsibly.

For more tips on how to get started, check out the Credit Karma Guide to Building Credit.

Banking giant Goldman Sachs and Apple are partnering to issue a credit card.

Exact details of the credit card aren’t available yet, but as reported by The Wall Street Journal, the card could help break Goldman Sachs into the credit card space and help expand the brand for Apple’s mobile payment tool, Apple Pay.

Apple currently has a credit card with Barclays that offers special financing to cardholders who use the card to pay for Apple products within the first 30 days of opening the account. According to Marketwatch, the new Apple–Goldman Sachs card could work the same way, though consumers will have to wait for the official announcement to confirm the card’s terms and benefits.

What does this mean?

An Apple–Goldman Sachs credit card may help speed up the slow growth of mobile payments in the U.S.

Despite many new phones having mobile payment capability, a PwC survey of 1,000 American consumers showed that only 42% have used some form of mobile payment at least once. Compare that to China, where 95% of Chinese consumers surveyed reported having used a mobile payment.

Why does this matter?

Why are mobile payments so important? Security and preference.

Mobile payments may offer enhanced security over physical cards. When you make a transaction using a mobile wallet, a computer-generated number stands in for your actual account number. The payment processor matches the generated number with your actual account number and then the charge is processed.

This is important because your real card number isn’t transmitted to the payment processor, which makes hijacking credit card numbers from a retailer’s database near impossible.

But it isn’t all about security. Many American consumers love spending money with their mobile wallets.

Data show that 40% of mobile payment users surveyed by PwC said that it’s their preferred payment method, and that they’re more likely to shop with a retailer who offers mobile pay. Heads up, though — 36% of consumers surveyed said they spend more money when using a mobile payment.

Bottom line

Once the credit card from Apple and Goldman Sachs launches, it may have a significant impact on how Americans pay for everyday purchases — even if they don’t apply for the card. If mobile payment continues to break into the American mainstream, increased use of mobile payments could mean less fraud and, potentially, easier spending for everyone.

Universities in danger of losing the ability to participate in federal student aid programs may be attempting to evade regulatory oversight designed to address a significant student loan default problem facing the U.S., according to a recent U.S. Government Accountability report.

The GAO report — which puts federal student loan default at $149 billion as of September 2017 — showed that a handful of universities and colleges worked with consultants who encouraged borrowers with past-due payments to put their federal student loans in forbearance. Forbearance allows borrowers to temporarily stop making payments on their loans while still incurring interest on the balance.

Why do this? If too many borrowers from a school have student loan defaults within the first three years of repayment, the school may lose access to federal student aid programs, including collecting federal loan payments from new students — often a main source of revenue. Loans in forbearance, however, are not considered to be in default, which can help a university keep its place in the financial aid program.

Why does this matter?

While forbearance can help borrowers in the short term — for example, during a financial emergency, like a job loss or unexpected medical costs — it can have potentially detrimental long-term effects. For example, the GAO found that if the typical borrower with a $30,000 loan balance spent their first three years of repayment in forbearance, they would end up paying an additional $6,742 in interest. That’s a 17% increase.

Some people, like Rep. Rosa DeLauro, the ranking Democrat on the House Labor, Health and Human Services and Education Appropriations Subcommittee, have argued that Congress and the Department of Education should take steps to end the practice, by stopping consulting agencies from taking advantage of borrowers in this way.

The GAO itself recommended that Congress update the current accountability system — specifically asking for more transparency in how default rates are reported, and for a revised system that counts students in forbearance as part of the school’s cohort default rate.

Why should you care?

If you’ve had past-due payments on your federal student loans and attended a school that used a default-management consultant, you might have been affected.

According to the report, consultants working for certain universities often incentivized students with past-due loans to apply for forbearance. The report notes that some consultants offered gift cards to borrowers to encourage applying for forbearance, while others simply mailed or emailed forbearance applications to borrowers with past-due balances — potentially suggesting forbearance was the borrower’s only option.

What can you do?

If you’ve considered putting your own student loans in forbearance to avoid defaulting (or if you’ve been led to believe that forbearance is your only option), you should know you may have other options that might be better for your financial situation. The Department of Education’s Federal Student Aid website offers information on various options for managing repayment of your federal student loans.

Here are a few other strategies to explore that may also help make your debt more manageable.

• Make more than the minimum payment. When possible, try and pay more than the minimum payment on your monthly student loan bill. The faster you pay down your loans, the less interest you’ll pay. Even paying an extra $20 a month may have a real effect on your interest costs. 
• Consolidate and refinance. Consider refinancing and consolidating your loans with a lender with lower interest rates. Not only can this lower your interest costs, but it could help you keep your sanity if you have multiple student loans. You may even be able to consolidate your federal student loans. 
• Pursue a job with loan forgiveness. Some employers — namely those in teaching and public service — offer student loan forgiveness to qualifying employees. This money is typically awarded after meeting certain requirements and may cover part or all of your loans.

According to CNBC, despite millennials having a bad rap for finances, a recent Bank of America Merrill Lynch survey shows millennials may have more-prudent plans for their tax-cut savings compared to Gen Xers.

Instead of spending the extra cash they might be getting after February’s tax cuts, the survey reports 17% of millennials surveyed are planning to use it to pay down debt, 8% will invest the money, and 20% are going to save it. In contrast, only 8% said that they plan on using the money for day-to-day spending.

Compare that to Gen Xers surveyed, who reported being 3% more likely than millennials to spend their tax cut on day-to-day purchases, 2% less likely to save their tax-cut money and 2% less likely to use it to pay down debt.

What does this actually mean?

U.S. Treasury Secretary Steven T. Mnuchin estimated that about 90% of all American workers would see a bump in take-home pay after the changes to the tax code went into effect in February. The recent Bank of America Merrill Lynch report suggests millennials are more likely than their Gen X counterparts to save or invest the additional money.

This may be because millennials tend to have better money habits in general. A 2017 study by Bank of America indicates that even before the tax cuts, millennials were as good, if not better, at saving money than older generations. The study shows 57% of millennials surveyed had a savings goal and 54% were budgeting their money. Even better, 47% of millennials had $15,000 or more in savings.

This is an interesting contrast, particularly when thinking about some of the financial burdens millennials face. For example, a study by RentCafe citing U.S. Census data uncovered that millennials pay a whopping $92,600, on average, in total rent payments by the time they hit 30.

Why should you care?

For many, these additional tax savings have been substantial. According to NPR, with information provided by the Tax Policy Center, the average American worker making $75,000 to $100,000 a year would see an average boost of $1,310 annually. If you’re seeing similar gains, consider joining the millennials saving, investing and using that money to pay down debt.

In terms of the economy at large, Wall Street may have mixed feelings on millennials choosing to save their tax cuts.

On one hand, millennials choosing to save that money may decrease Wall Street’s hope for a consumer spending boom. The Street notes that Best Buy and Kohl’s stock prices have been up this year on the expectation of consumers spending their increased take-home pay. So news of increased saving by millennials may very well be a disappointment to these, and similar, brands.

However, as noted earlier, 8% of millennials are planning on investing their extra take-home pay. This can put more money into the stock market and may help fuel the uptick we’ve seen there over the past year.

What can you do?

Wondering what to do with your extra tax-cut cash and tax refund this year? Here are a few ways to help maximize your increased take-home pay in 2018.

• Pay down high-interest debt. First thing’s first: think about paying down your high-interest debt. This can include things like personal loans, credit cards and payday loans. Paying down these debts can save you money on interest in the long run — probably more so than if you put your money into a savings account and kept paying the minimum payments on your high-interest card.
• Create an emergency fund. Consider starting an emergency fund that’s large enough to sustain you and your family for 3–6 months if you were to lose your job or hit a significant financial roadblock. This can give you peace of mind and help ensure financial stability during difficult times. Consider storing these funds in a certificate of deposit or other FDIC-backed, financial tool — with the reassurance of knowing the standard FDIC-insured amount is $250,000 per person, per bank, per ownership category.
• Consider investing. There are a number of high and low-risk ways to invest your money. While the stock market may not be for everyone, do your research to decide if a mutual fund, money market account, or even a smart-investment app like Wealthfront® or Betterment®, could be the right investment tool for you.

When most people get sick, they go to the doctor. But rising medical costs are beginning to make doctor visits feel like a luxury for many baby boomers and Gen Xers.

A new survey by NORC at the University of Chicago and West Health Institute shows that 40% of Americans who responded admit to skipping a recommended medical test or treatment in the previous 12 months. What’s more, 44% of respondents admit they didn’t go to a doctor when they were sick or injured.

The culprit? Steep medical costs that have made healthcare unattainable for some.

About 30% of those surveyed said they had to choose between paying for healthcare or paying for basic necessities such as food, heat or housing.

Rising medical costs have been especially hard on baby boomers and Gen Xers. In the survey, 49% of Gen Xers (ages 45 to 59) reported not going to the doctor when sick or injured, and 25% of baby boomers (ages 60+) reported skipping a recommended medical test or treatment.

Younger adults say they go without care more often than baby boomers and Gen Xers, but they may be better able to afford skipping the doctor than their older counterparts.

What does this actually mean?

Think high-priced healthcare only affects those without insurance? Think again.

In a recent statement to Forbes, Dr. Zia Agha, chief medical officer at the West Health Institute, noted that health insurance isn’t necessarily a shield against high costs.

“Eighty percent of the people we surveyed had health insurance,” he said, “so just having insurance does not make you immune to healthcare costs.”

If you’ve ever been shocked by a medical bill and stressed about how to pay it, you probably know what Agha means. And the notion that Americans pay far too much for healthcare is more widespread than you may think.

Nearly three-quarters of Americans agree that the U.S. doesn’t get good value for what the country spends on healthcare. That’s a problem, because the U.S. spends roughly twice as much per person on healthcare compared with other industrialized countries.

Why should you care?

Healthcare policy has been a contentious issue in Washington since the enactment of the Affordable Care Act in 2010. The comprehensive health care reform law sought to make health insurance more affordable for more people, but there’s still a long way to go.

In spite of widespread dissatisfaction over what the U.S. spends on healthcare, a majority of those surveyed believe Congress should vote to increase spending on Medicare (56%) and Social Security (53%).

On the other hand, only 37% want to see an increase in ACA spending.

The future of healthcare likely depends on the politicians in Congress and the White House, but nearly every American would be affected by changes in healthcare policy.

What can you do?

There’s little doubt that the high cost of healthcare is deterring people from seeking medical attention.

If you’re thinking about skipping an operation, test or other medical treatment because of the high cost, consider all your options first. You may be able to find a lower-cost alternative to traditional health insurance.

• Consider a direct primary care membership. Think of a direct primary care membership as a health club membership for the doctor’s office. Members pay a monthly, quarterly or annual fee to a specific healthcare entity in exchange for fully or mostly covered primary care services, including access to clinical, laboratory and consultative services. Note that some services are not covered by the fee, and you may want to look into an additional policy for emergencies.
• Check the healthcare marketplace. Look into the HealthCare.gov marketplace and see which health insurance plans you’re eligible for. The website also provides resources for paying premiums and reducing out-of-pocket costs.
• Weigh the pros and cons of a high-deductible policy. If you’re young and don’t expect to use your health insurance often, a high-deductible policy may be your best bet. These policies have lower monthly premiums than standard health insurance but come with higher deductibles when seeking care, so you’ll pay more out of pocket throughout the year before your insurance kicks in.

Credit scores can determine whether you’ll get approved for a loan, but could they bar you from traveling on trains and planes?

According to China’s new “social credit” system, yes. As of May 1, Chinese citizens who propagate false information about terrorism or smoke on trains will be put on restricted lists and prevented from traveling for up to a year.

Other misdeeds that may also send a Chinese citizen’s social credit score to the “no fly” zone include using expired tickets or causing trouble on flights.

More troublingly, citizens who commit financial wrongdoings — such as failing to pay a fine — could also be subject to these restrictions. China’s National Development and Reform Commission issued two statements on its website last week explaining the policies.

As Reuters reports, the move comes as part of President Xi Jinping’s desire to create a social credit system with the principal tenet of “once untrustworthy, always restricted.”

The “social credit” system could extend far beyond planes and trains too. Marketplace reports a case in which a blacklisted citizen was prohibited from obtaining loans, buying properties and even paying private school tuition for his child.

All of this sounds a bit unprecedented, and you might be wondering if the U.S. could be next in line. The good news — at least for consumers — is that the U.S. credit system doesn’t function quite like President Jinping’s social credit system.

What does this actually mean?

China doesn’t have a financial credit scoring system like the U.S. does. Because many Chinese do not have a credit card, mortgage or other type of loan, it’s hard to calculate a person’s credit based on factors commonly used in the U.S., such as payment history and age of credit history.

Instead, China’s “social credit” score attempts to identify other types of behaviors that could determine a person’s creditworthiness. There may not seem to be any connection between paying off your loans and smoking on a train, but in the eyes of Chinese authorities, both behaviors might speak to your overall creditworthiness and credibility.

Another key difference between the Chinese and U.S. systems is when you can get such derogatory remarks removed from your credit reports.

In the U.S., derogatory marks may stay on your credit reports for years, but they eventually can fall off and you can diminish their impact by practicing good credit habits.

In China, however, social credit operates under the premise of “once untrustworthy, always restricted.” It’s unclear how someone on the blacklist can be removed from it.

Why should you care?

Fortunately, you don’t need to worry about a social credit score taking off in the U.S. any time soon.

The three major national consumer credit bureaus — Equifax, TransUnion and Experian — have recently made changes that could lessen the impact of derogatory marks on your credit scores.

The three bureaus estimate that about half of all tax liens and nearly all civil judgments have been removed from consumers’ credit reports as of July 1, 2017. The change is a part of the National Consumer Assistance Plan, which is a result of discussions and an agreement between the three major credit bureaus and 31 state attorneys general reached in 2015.

This change caused a number of credit scores to rise slightly in 2017 and acts as reassurance that the U.S. isn’t headed down the same path as China — at least for now.

Bottom line

China’s social credit system is no doubt concerning to anyone who doesn’t think credit should prevent people from using basic services.

Fortunately for U.S. citizens, the trend seems to be moving in the opposite direction since credit bureaus have begun to place less of an emphasis on civil delinquencies and public records.

If you’re concerned about the effects of derogatory marks on your credit reports, you can follow a few simple guidelines:

• Wait. Assuming you address the underlying cause, most derogatory marks fall off your credit reports with time. Even a bankruptcy should fall off seven to 10 years from the filing date.
• Pay on time. Pay off any accounts that are past due and continue making at least the minimum payments on your open accounts. Practicing good credit habits can be a great way to build your credit over time.
• Dispute any inaccuracies. You can dispute errors on your TransUnion credit report using Credit Karma’s Direct Dispute™ feature. If you see something that looks wrong, don’t simply wait for it to go away.