What happens to the balance on a credit card when the cardholder dies depends on the situation. Factors such as where you live, whether the card is a single or joint account, and if any assets are left in the estate can all come into play.
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Spouse's Account in Decedent's Name Only
If your spouse dies, you may or may not be responsible for any credit card debt. If the credit card is only in the decedent's name, the credit card company typically makes a claim against the estate to receive the balance owed, according to the FreeScore website. If no assets remain, the credit card company simply writes off the debt as a loss.
Spousal Joint Account
If you share a joint credit card account with your spouse, you are liable for any balance remaining if your spouse dies. If you are only an authorised user on the account rather than a joint account holder, you are not responsible for paying the credit card balance, according to the FreeScore website. If you live in Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington or Wisconsin, which are community property states, you might be responsible for the debt whether you are a joint account holder or not. Not all community property states have the same rules, so check with your state government to see which laws pertain to you. If you are responsible for the credit card debt, you must pay it or your credit score will suffer.
Your Parent's Card
If your parent dies with credit card debt, and you are not a joint account holder, you are not responsible for it. Credit cards are unsecured debts, meaning they are not attached to an asset, such as a car or a house. You are not responsible for unsecured debts unless you were a joint account holder, in which case you would be responsible for paying the debt, according to MSN Money.
Even though you are not legally responsible to pay a deceased family member's credit card debt unless you are a joint owner on the account or unless you are a spouse living in a community property state, that does not necessarily stop collection agencies from trying to get you to pay, says Liz Pulliam Weston on MSN Money. If a bill collector contacts you to try to get you to pay the debt of a deceased family member of which you are not responsible because of the reasons stated above, simply hang up the phone, advises Weston.
If you are the executor of the estate, do not rush to pay bills too quickly, says Mary Randolph, author of "The Executor's Guide," on MSN Money. If you pay the credit card bill when it comes in, you might not have enough money in the estate to cover the funeral costs, for example. If there are no assets, you should send a letter to the creditors stating there are no assets, and include a copy of the death certificate. If there is money left for credit card companies, you would pay them or divide the money that is left in the estate between the creditors.
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