Generally, when you add someone else to your bank account that person becomes a joint owner of the account. As a joint owner, that person has the right to make withdrawals and to close the account. However, in some instances, banks allow you to add an authorized signer to your account without requiring you to share ownership of the account with that individual.
Power Of Attorney
A durable Power of Attorney (POA) document allows you act as an agent on behalf of another individual. People often create POAs when they go into hospital or are stationed overseas. If you give a copy of your POA to your bank, it can add the agent listed in the document as an authorized user or signer on your account. The agent manages the account on your behalf and can even close the account or open new accounts. However, the authorized signer can only transact on the account for as long as the POA remains in effect.
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Some banks allow you to add an authorized signer to your account even if you do not have a durable POA. Your bank may allow you to add so-called "convenience signers" who can only conduct certain transactions such as paying some bills, making deposits or checking your account balance. You can specify the degree to which the signer has access to your account. However, due to liability issues related to these informal arrangements, many banks no longer allow convenience signers, in which case you must either obtain a POA or allow the prospective signer to become a joint owner.
On business accounts such as those owned by partnerships, the only people who can sign on the account are the business owners. However, on a corporate account the money in the account belongs to the business and not the individuals who own shares in the business. Therefore, banks classify everyone who has access to a corporate account as an authorized signer or user. You can add or remove signers from the account at any time. Additionally, you can order debit cards for the account users although you must remember to cancel these cards when those signers leave the business or are removed from the account. The same rules apply to accounts set up by nonprofit groups.
Aside from deposit accounts, you can add authorized users to credit cards and safe deposit boxes. An authorized signer on a safe deposit box has no ownership rights to the contents of the box, although you cannot hold the bank liable if the signer removes the contents of the box. The bank has no knowledge of what you keep inside. On a credit card, the authorized user has access to a credit line that someone else opened but does not actually have the responsibility of repaying the debt. However, a credit card that you sign on may appear on your credit report and that could help or harm your credit score.
- Banking Questions; Authorized Signer Wants Account Info; January 2009
- Bankers Online; What Can Authorized Signers on an Account Do?; John Burnett; April 2009
- Banking Questions; Authorized User same as Account Holder?; July 2008
- Bankrate.com; Downside of Being an Authorized User; Lucy Lazarony; March 2003
- FDIC.gov: Ownership Categories