Watch Out for a Potential Auto-Pay Pitfall

With the prevalence of automated bill payments options, many people have set up online accounts for the seamless payment of all the common household bills. Paperless options can streamline and simplify those recurring monthly bills. However, it is important for married couples to analyze how these payments and notifications are sent in the event a spouse suddenly passes away.

For example, let’s look at a common scenario.  Bill and Mary Sample have been married for 40 years. Everything they own is jointly titled, or so they believe. Bill has set up all the monthly household bills to be automatically paid through his VISA credit card. Mary also has a linked VISA credit card under the same account but with a different number. Bill has also selected the paperless option to reduce wasteful paper usage.

Bill passes away unexpectedly.

Mary has never paid the monthly bills because Bill told her it was set up to pay automatically. Mary also does not receive any bill notifications because they are being sent to Bill’s email address. The credit card company closed Bill’s account and now none of the bills are getting paid.

The credit card company automatically closed the account because Bill was the primary account holder. Upon his death, the credit card can no longer be used. Mary’s card no longer works because she was only an authorized user, not a joint account holder.

The important distinction – for non-joint credit card accounts where other users are only authorized users: the primary account holder is the individual responsible for the credit card debt. Other authorized users will not be liable for the credit card debt. However, the account will be closed upon the primary account holder’s death. For joint credit card accounts: both parties are responsible for the credit card debt. The card number for the deceased cardholder will be closed upon death, but the account can remain open under the surviving joint cardholders name.

There are pros and cons to each way of titling your credit cards. A joint credit card account is not appropriate for everyone as one spouse may have a better credit rating or you may decide that you do not want to be liable for your spouse’s credit card debt.

The important thing is to know how your accounts are setup to make the transition as seamless as possible upon the death of one of the cardholders. If you are unsure whether you have a joint account or an authorized user account, contact your credit card company to find out. Either way, both spouses should be aware of how the accounts are set up and the bills are paid.