Who is Left with Your Credit Card Debt When You Die?

Stephanie Miller
March 9, 2018
Death and Debt

The average American currently has over $6,000 in credit card debt. If you are currently walking around with a balance on one or more cards, you may wonder what would happen to it if you were to unexpectedly pass away. Would your spouse be on the hook for the balance owed? Could your parents or children see a bill come their way?

Luckily, credit card debt is a type of unsecured debt, meaning that there is no collateral behind the line of credit. While an auto lender would repossess your car, your card issuer isn’t going to come and take away the shoes, televisions, or groceries that you charged. So, who is on the hook for your debt if you pass away without paying off the balance?

If you’re the sole accountholder

If you are the only person on your credit card account and you pass away, the debt owed will not transfer to your loved ones. Since the debt is unsecured, the credit card company also has nothing to come take back from you.

The credit card company can and will come after your estate, though, especially if you leave assets behind for your family. If you have a life insurance policy, equity in a home, or even investments, the card issuer will show up with their hands out, expecting the assets left in your estate to pay off the remaining balance. However, credit card companies are typically at the back of the line when it comes to satisfying debts from an estate, with mortgage companies and auto lenders (who have secured debts) taking precedence.

But what if you have more debt left behind than assets? Well, in that case, the credit card company is largely out of luck. They can’t legally come after your family for the balance owed (though some will try) and will be forced in the end to write off the remaining debt.

If you have an authorized user

When you add an authorized user to a credit card account, you give that person spending power on your line of credit. However, you don’t shift liability for the debt over to them.

This means that if you pass away and still owe on the credit card, your authorized users won’t be on the hook for the balance. The only caveat here is that if they intentionally rack up charges knowing that you are, say, nearing the end of a terminal illness (knowing full well that you will not pay off the balance prior to your death), the company could come after them. Also, if they continue to use the card after your death, they may be on the hook for the new charges.

If you have a joint accountholder

Even if you have been the sole accountholder on a credit card for years, the moment you add a joint accountholder, everything changes.

Joint accountholders are not just authorized users. They actually sign up to be equally responsible for any debt incurred. This is a permanent change, too – you can’t typically remove a joint accountholder from an account, even in cases of divorce. Instead, you’re forced to close the original, joint account and open your own separate accounts.

Whether this person is your spouse, a child, a parent, a business partner, or anyone else, they will be responsible for the entirety of the debt owed if you pass away. This is true even if you had a private agreement, divorce decree, or other contract to the contrary. These sorts of agreements don’t apply to the credit card companies, so they will be knocking on your joint accountholder’s door for the balance due.

Avoid Leaving a Burden

If you have credit card debt, it’s important to think about its impact on your loved ones, were you to pass away tomorrow. This is yet another great reason to try to get out of credit card debt as soon as possible, or at least purchase a life insurance policy that will cover the debts you owe in case of your death.

While your estate may be able to satisfy the credit card balance you still hold, it will eat into the assets that your loved ones would otherwise receive. This could seriously impact their quality of life and financial security. At the very least, you should consider a small life insurance policy that would cover your debts owed and final expenses, so that your family doesn’t bear the burden of your credit card debt – even if they aren’t “technically” on the hook for it.

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