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What happens to credit card debt when you die?

Posted by Cheryl Costa  June 29, 2012 08:54 AM

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If a person dies owing a balance on their credit card, the credit card company will collect the debt from the cardholder's estate. If the cardholder does not have sufficient assets to cover the debt, the credit card company is generally out of luck. In some circumstances, the credit card company will approach relatives of the deceased and ask them to pay the debt but that practice is rare and the relative has no obligation to pay the outstanding debt.

However, if the account was opened as a joint account, the other account holder will be liable for the debt but this is only the case when the other person is a part of the credit card contract. If the other person using the card is merely an authorized user (but not a joint credit applicant) then they are not responsible for the debt. Along those lines, if you are an authorized user of a card and the account holder dies, the account will be closed and you will have no further access to the credit line. This may seem pretty straightforward but many people think that they can simply transfer the account to their own name. Instead, that person will have to apply (and qualify) for credit based on their own circumstances.

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D. Abraham Ringer is a CERTIFIED FINANCIAL PLANNER practitioner and a Financial Adviser with Morgan Stanley Global Wealth Management in Boston. He is registered in MA, NH, NY and several other states to which his articles are directed. For more information please visit www.morganstanleyfa.com/ringer
Financial Planning Association™ of Massachusetts has 900 members who specialize in the financial planning process. Many of its members engage in philanthropic pro bono work in their communities, recommend legislation, elevate public awareness, promote financial literacy, and advocate for sound economic and tax policies.
Odysseas Papadimitriou is the founder of CardHub.com, a credit card and gift card marketplace, and WalletHub.com, a personal finance site. He has more than 13 years of experience in the personal finance industry, and previously served as senior director at Capital One.

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