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- When a loved one dies, it’s important to notify credit bureaus to prevent identity theft.
- Each bank has a different procedure for closing cards, and they all require a death certificate.
- Rules for loyalty program points vary — some are forfeited when you die, others are transferable.
- Read Business Insider’s guide to estate planning .
A friend recently sought my advice on estate planning and said, “When I die, deal with my credit cards and enjoy whatever points I have left.”
This got me thinking: How exactly do you deal with credit cards and rewards points when someone dies? Where do you even begin?
While you should get legal advice before you start navigating the deceased person’s estate, here are general tips on the steps to take to cancel credit cards and manage loyalty points after a family member or close friend dies.
Assess the situation and gather documents
After a death, there’s a lot to do. Once you receive a death certificate, you should start the process of managing the deceased’s finances. This process is usually done by a family member or a person noted in the will.
You’ll first want credit bureaus to note the death in the deceased’s credit report and to get a list of all credit cards they had. Contact one of the three nationwide credit bureaus (Equifax, Experian, or TransUnion) to notify them of the death and get a copy of their credit report. Each bureau has a different process that always includes sending a copy of the death certificate.
While the Social Security Administration normally notifies credit bureaus of the death, personally contacting them will ensure that a death notice is entered in their credit report, reducing the risk of identity theft. Once noted, lenders will see the individual is deceased and not issue credit.
You only need to contact one bureau as they will automatically notify the others.
Once you receive the credit report, you’ll need to identify all open credit cards, and contact each lender to notify them of the death. Each issuer will have a different procedure for closing the card — most will require that you fax or mail a copy of the death certificate.
Lenders may also automatically close cards when they see the death notice on the credit bureau.
The CARD Act of 2009 establishes the rules for credit card debt after death. Once the lender is notified, it will close the credit card and provide a final bill to the estate within 30 days.
While the estate is being settled, no additional late fees, annual fees, or over-limit fees can be charged. However, interest on the debt continues to accrue. If the estate pays the debt within 30 days of receiving the final bill, no additional interest is charged on the billed amount. The normal card interest rate will apply if not paid.
If there’s a balance owing, the executor of the estate will use any assets to pay off the debt in a process called probate. If there aren’t sufficient assets to pay the debt, the excess is usually written off, with some exceptions.
If there’s a co-signer, the lender may go after them for the excess debt. If the credit card was jointly opened, then the surviving person can continue using the card and is responsible for making payments. An authorized user is not responsible for the debt but is unable to use the card since the account will be closed.
In most states, a spouse isn’t responsible for the debt of their deceased partner, unless they live in a “community property” state: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Alaska, Tennessee, Kentucky, and Puerto Rico allow spouses to voluntarily enter into a community property agreement.
If you live in a community property state or voluntarily entered into a community property agreement, the surviving spouse may be responsible for the debt. Each state has different rules, and you should consult a lawyer for more precise guidance.
If you receive calls from creditors or collection agencies about debt, refer them to the executor of the estate. They are responsible for handling the debt, and you could put yourself at risk by providing them with information or inappropriately assuming debt you’re not responsible for.
Every credit card issuer has its own rules for managing points after death. For example, American Express Membership Rewards has a process to take ownership of an account. Chase Ultimate Rewards terms say “If we’re notified of your death, your points will be automatically redeemed for cash in the form of an account statement credit.”
Miles and points earned with an airline or hotel are subject to the terms of that program. For example, Delta SkyMiles are forfeited upon death, while Marriott Bonvoy allows transfers to a family member or friend. Research the rules of each credit card, airline, and hotel loyalty program to understand how points will be managed. This information is usually located in the program terms and conditions.
You can make things easier for your estate if you make a plan to handle your points, miles, and credit card rewards. Like other assets, you should explain how you want your points to be used in your will — a lawyer can help you with this.
If you leave a list of usernames and passwords for credit cards and airline or hotel programs, a trusted friend or family member can manage your points directly. Some people provide this list to their lawyer to only disclose upon their death. You can also use a tool to keep track of rewards and give your estate access in your will.
Avery Campbell is a personal finance writer focusing on credit cards and travel rewards. He holds a law degree, specializing in air and space law.
