How to Avoid a Credit-Card Surprise When a Spouse Dies -- Journal Report
By Daisy Maxey
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.
"I know so many women who have a card that has their name on it,
but it isn't really their card," says Karen Altfest, executive vice
president at Altfest Personal Wealth Management in New York, who is
now working with the widow.
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
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.
And some credit cards permit a primary cardholder to set
spending limits on authorized users. Parents often name college-age
children as authorized users to help them build or rehabilitate
their credit records. Most of the biggest credit-card issuers do
report to the credit bureaus on authorized users, but in some
cases, the impact of the card's activity on the authorized user's
credit record isn't as significant as it would be for a primary
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 they are worthy of the credit
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.
Authorized users -- whether a spouse or not -- are generally not
liable for debt left on a credit card when the primary cardholder
dies. The debt is generally assumed by the decedent's estate. The
law in some states, however, does hold a spouse who is an
authorized user responsible.
When both spouses qualify, there can be advantages to holding a
joint credit-card account, says Kristin Carlton, a San
Antonio-based senior wealth adviser with Exencial Wealth Advisers,
a registered investment adviser. One of her clients lost hundreds
of thousands of airline miles on a credit card when her husband,
the card's primary account holder, died, she says.
Still, while all of the financial institutions named in this
article allow primary consumer cardholders to add authorized users,
many have moved away from offering joint accounts, because
designating one party legally responsible for the debt makes the
process easier for the card companies if they have to take legal
action to collect.
"To have two payers, it just muddies the waters," says Ms.
Financial institutions that still offer joint credit-card
accounts include Bank of America Corp., PNC Bank and U.S. Bancorp.
Bank of America offers joint cards only on a very limited
Wells Fargo & Co. hasn't offered new joint general-purpose
credit-card accounts since 2017. Other institutions that don't
offer joint consumer credit-card accounts include Capital One
Financial Corp., Citigroup, Discover Financial Services and
JPMorgan Chase & Co.
A family member should notify credit-card companies, credit
bureaus and the estate's executor when a family member dies, and
close out a credit-card account when its primary cardholder dies,
says Duncan Rolph, managing partner at Miracle Mile Advisors, an
investment advisory firm in Los Angeles. That helps to eliminate
any recurring charges that may be going onto the card, he says.
There is also a potentially high risk of identity fraud when a
primary cardholder dies, Mr. Rolph says.
Ms. Maxey is a writer in Union City, N.J. She can be reached at
(END) Dow Jones Newswires
March 05, 2021 09:14 ET (14:14 GMT)
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