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question everything

(47,265 posts)
Tue Mar 9, 2021, 06:18 PM Mar 2021

How to Avoid a Credit-Card Surprise When a Spouse Dies

After her husband’s death, an elderly widow received a jarring surprise—the credit card she had been using was shut down. Her husband had been the primary account holder. The distraught widow had cash in a bank account, but without a credit history or income of her own, it would take time for her to build her credit record to the point where she could be approved for her own credit card.

(snip)

The problem, Ms. Altfest and others say, is that consumers often don’t understand the differences between having a joint credit-card account—one in which both parties have charging privileges and are equally responsible for the debt—and an account issued to a primary cardholder, who designates additional authorized users. In the latter case, both parties have charging privileges, but the primary cardholder is generally solely liable for the card’s debt.

Joint credit cards are often used by couples to handle household expenses. But when one spouse doesn’t have a strong credit history—for example, because he or she is a stay-at-home parent—the card is typically issued to a primary cardholder who can then name additional authorized users. Having more users can build up whatever rewards points a card might offer.

(snip)

It is easy to remove an authorized user from an account with a request either from the primary account holder or from the authorized user. For one of the parties in a joint account to be removed, by contrast, both parties must agree to release that person from liability. The bank will then check the credit of the remaining card user to be sure he or she is worthy of the credit line.

As happened with Ms. Altfest’s client, revelations may be in store when a couple is divorced or when a primary cardholder dies. If a card represents a joint account, the second user can typically go on using the card, but he or she will also be responsible for any debt. If a husband dies owing $50,000 on a joint credit card, his wife on that account is liable for that debt. But authorized users may find their card canceled because of the primary cardholder’s death. They can then apply for their own credit line, but they might find that their credit history isn’t sufficient to win approval.

More..

https://www.wsj.com/articles/how-to-avoid-a-credit-card-surprise-when-a-spouse-dies-11614952801 (subscription)

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I'd better start checking our credit cards..

8 replies = new reply since forum marked as read
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How to Avoid a Credit-Card Surprise When a Spouse Dies (Original Post) question everything Mar 2021 OP
Yes, women need credit cards in their own name. True Blue American Mar 2021 #1
The surviving spouse can build credit and get a credit card pretty easily Shermann Mar 2021 #2
Ironically, I was on the 'other' side of it. MyOwnPeace Mar 2021 #3
What a story! And please accept my condolences. No one should be harassed like that question everything Mar 2021 #7
Well, THANK YOU! MyOwnPeace Mar 2021 #8
I suppose this is useful information ... Hugh_Lebowski Mar 2021 #4
Authorized Users Get the Benefit of The Card Owner's Use That's Reported to Credit Bureaus Indykatie Mar 2021 #5
I will no longer use our AT&T Universal card because of this problem csziggy Mar 2021 #6

Shermann

(7,357 posts)
2. The surviving spouse can build credit and get a credit card pretty easily
Tue Mar 9, 2021, 06:44 PM
Mar 2021

A MUCH better strategy is to run up the dying spouse's card in their name only before their death (assuming there is ample warning).

Let the bank get the credit-card surprise.

MyOwnPeace

(16,888 posts)
3. Ironically, I was on the 'other' side of it.
Tue Mar 9, 2021, 06:49 PM
Mar 2021

My wife had been the primary card holder and I also had use of the card. When she passed away I called and explained why the payment for the last statement was late (it was due within days of her passing and she handled ALL of the money matters!) - they said not to worry but to also send a copy of the death certificate.
No problem - paid the balance of the last statement and sent the copy of the certificate.
However, since the last billing period had passed and I had made another purchase prior to their notification, there was a NEW outstanding balance of something like $33.00.
A few days after the funeral I received a phone call asking to speak with the 'executor' of 'the estate' - wishing to have the 'balance' of the account sent to close out the billing.
I explained that I was the husband and whatever the 'balance' was would be covered when I received the next month's bill.
I was told that there were not going to be any more 'bills' - they needed the balance paid now.
Again, I said "send the statement, I will send the balance."
And again, I was told that there would be no 'statement' - they needed the balance paid NOW.
At this point I was QUITE angry and told them "SEND IT - I'LL PAY IT!" and hung up.
Mind you - this was within a week of my wife's passing.......

After a minute I picked up the phone and called the last number.
Imagine the shock when the answer came from a "COLLECTION AGENCY!"

After having an account with this store and using their card for over 10 years, with an average 'bill' of $1500 per month, paid in full each month - this store (I'm not going to name the store, but you could perhaps think of red circles like you might see at a shooting range) had turned my balance of $33 over to a collection agency!

I would encourage anybody using credit cards to carefully re-read the original post - there's much to be learned there!

 

Hugh_Lebowski

(33,643 posts)
4. I suppose this is useful information ...
Tue Mar 9, 2021, 07:10 PM
Mar 2021

Still kinda mind-blowing to me that people don't already know how this stuff works, the difference between a primary/joint account holder vs. being an authorized user.

Being an authorized user DOES go on your credit report and can help boost (or lower) your score ... though creditors and reporting agencies (Equifax, etc) have their own standards as to how much they 'count' your accounts for which you were only an authorized user as opposed to primary holder (which can work out well or poorly for you, depending on how the primary card holder handled their credit).

Some creditors also do not report authorized users to the credit agencies, whereas some others do.

Generally speaking though an authorized user is quite a lot like being a primary or joint card holder AFA your credit report goes.

Indykatie

(3,691 posts)
5. Authorized Users Get the Benefit of The Card Owner's Use That's Reported to Credit Bureaus
Tue Mar 9, 2021, 07:16 PM
Mar 2021

As an authorized user this widow would have a credit history derived from being an authorized user. I always added my daughter and then granddaughters as authorized users on my cards to help them build their credit. They had 700+ credit scores before they even started working and applied for credit in their own names.

csziggy

(34,120 posts)
6. I will no longer use our AT&T Universal card because of this problem
Wed Mar 10, 2021, 02:15 AM
Mar 2021

Every other credit card my husband and I have list both of us as full account holders. The AT&T card will not - which I found out when I tried to call them about a problem. They would not talk to me at all and I had to get my husband to call them to settle the problem.

What really pisses me off is that the only reason we have that card is that I used to have AT&T long distance on the phone number that has always been in my name only and they issued me a calling card. At some point they "upgraded" the calling card to a credit card but for some archaic reason decided to make my husband the primary person on the account and me just an auxiliary card holder. Never mind that the original accounts were solely in my name, every check that ever was used to pay for any of the accounts, phone or credit was written by me. I didn't count because I am a woman, I guess.

For a while I still used the AT&T card for Amazon purchases since they made it easy to use the points accumulated on the card account. But not any more.

A similar thing happened with our GM card. I opened the account, thinking I might use the accumulated points towards buying a new car. Up to that point, I'd been a faithful GM customer. *I* opened the account, *I* filled out the application, *I* paid every bill, but they would only talk to my husband if a call had to be made. That card got put away in the filing cabinet - closing it would affect our credit - and has not been used in over fifteen years. They still send out new cards every few years, I don't even activate them anymore, just file them away.

The AT&T card will fit nicely in the same filing cabinet. The account balance has stayed at zero for over six months and will remain there.

Discover, no problem, AAA Master Card, no problem. Even the Bank of America card, no problem. The other two companies can just beg for our business.

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