If a credit card holder dies, who will pay the balance, family or someone else; what are the rules?
Like debit cards, credit cards are now being used by everyone. Payments made with credit cards offer benefits like reward points and cashback. With credit, you can spend first and pay later.
Therefore, people often wonder who will pay the bill if the credit card holder dies. Furthermore, will the family pay the bill? Let's find out what the rules are regarding this.
How will recovery happen?
If, unfortunately, a credit card holder dies, the bank recovers the money from investments, property, or other assets held in that person's name. In such a situation, the bank does not burden the family, as the responsibility for paying the credit card bill rests solely with the cardholder.
Furthermore, if the value of the assets in the deceased person's name is less than the outstanding balance, the bank considers the remaining amount as bad debt or non-performing assets. Let's understand how the bank determines the credit card limit.
How is the limit determined?
Before setting a credit card limit, a bank or any financial institution considers several important factors. For example, they first look at your monthly salary, your job position, and whether it's stable.
The bank also checks your credit score. Your credit score depends on your ability to pay your credit bills or repay your loans. Your credit score indicates your ability to repay your loans. A good credit score can lead to a higher limit.
The bank also tries to understand your spending habits and patterns. If you spend responsibly and appropriately, you'll be given a good limit.