Credit Cards Still Charge Interest After You Die – Info Tips and Tricks

There’s a saying that you can’t take stuff with you when you die. And as far as your debts go, that’s because they keep accumulating here on earth.

In the case of credit cards, a deceased cardholder’s debt becomes the responsibility of their estate, and interest doesn’t stop accumulating immediately. If the person who died has a living co-signer, however, the debt becomes theirs, and obviously interest keeps growing. Spouses may also be on the line for the debt in community property states.

That said, there are limits and regulations on what lenders can charge the cardholder for after they die, according to CreditCards.com. For example, once the executor of the estate gets in contact with the card company for the amount of the balance on the deceased’s account, the card company “must not impose any fees on the account [such as a late fee, annual fee or over-the-limit fee] or increase any annual percentage rate,” per the Credit CARD Act. (There are some exceptions to the APR freeze, including if the card has a variable rate.)

Residual interest—A.K.A. “trailing interest,” or what’s charged between when your billing statement is issued and the date you pay your bill if you keep a balance month-to-month—must also be waived or rebated “if the full balance is paid within 30 days of the card issuer’s disclosure of the amount owed.”

The executor of the estate may also be able to settle with the credit card company for a lesser amount than the full debt owed to save time and costs, the site reports.

Here’s what to do if you’re in charge of someone’s estate after they die and they have credit card debt, per CreditCards.com:

• Organize their accounts ASAP: Yes, it’s tough to think about the seemingly insignificant tasks that need to be accomplished after a loved one passes away, but it’s necessary. “As a court-certified representative or surviving spouse, you can request a copy of the deceased’s credit report, which lists all the credit accounts issued in the dead person’s name,” reports CreditCards.com.
• Don’t let anyone use the deceased’s credit accounts: Once your loved one dies, no one can use their accounts anymore—that’s fraud. This includes authorized users (but not joint users).
• Get official copies of the death certificate and send them to each credit card issuer and each of the three credit main bureaus, and keep a few for the estate.
• Notify the credit card companies: Close all of the deceased’s credit accounts as soon as you can to avoid interest and potential late payment fees. “You should notify the credit card companies by phone, and follow up by mail.” Send the letter via certified mail and keep a copy for your records.
• Freeze their credit reports at each of the three main bureaus to prevent identity theft. Follow up with a letter request (and keep a copy, same as above). You can contact the bureaus at Experian (888)-397-3742; Equifax (800)-685-1111; and TransUnion (800)-888-4213.
• Pay off the bill: Pay the creditors, paying attention to local laws and regulations. “Depending on state law, you may need to wait a specified period for bills to come in, and post a public notice of death in a newspaper before you start distributing money,” reports CreditCards.com.

Something else to remember: Scammers are likely to strike when they see that someone has died. According to CreditCards.com, “identity thieves troll the obituaries and online records to learn about recent deaths, so they can steal from accounts or create new ones.” So you’ll want to take care of everything as soon as you can.