Becoming an authorized user on someone else’s credit card can be a helpful way to establish your own credit history. For example, parents may add their children as authorized users to help them start building credit early. Similarly, spouses may share an account, with one spouse being the primary cardholder and the other as the authorized user. However, if the primary cardholder passes away, the authorized user may face challenges with the account.
When my grandfather passed away recently, my grandmother, who had been an authorized user on his credit cards for many years, found herself without any cards in her own name. This led to a process of figuring out if she could qualify for a new card based on the credit history she had built.
Fortunately, my grandmother was able to qualify for several cards, although the responses from issuers varied. Some offered her the same card under a new account in her name, while others required her to reapply, initially rejecting her before eventually approving her on a second attempt.
If you are an authorized user, it’s important to have a plan in place in case the primary cardholder’s account is closed for any reason, including their passing. Here’s what you can expect in such a situation.
You won’t be responsible for any debt
If the primary cardholder had outstanding credit card debt, you can rest assured that you are not liable for it. According to Drew Tsitos, manager of credit card products at Navy Federal Credit Union, any debt would be settled from the deceased’s estate. As an authorized user, you are authorized to use the account but are not directly responsible for its management or payments.
However, if you are also a beneficiary of the estate, the debts the estate must pay off could impact the amount of inheritance you receive. Additionally, in community property states, spouses may be held responsible for credit card debt incurred during the marriage, as noted by the Federal Trade Commission.
For a full list of community property states, you can visit the IRS.gov website.
Stop using the card and contact the issuer
If the deceased was a close relative, such as a spouse or parent, you may be responsible for handling their financial matters. It is important to inform the credit bureaus and the banks or credit unions where they held accounts of their passing.
(While they may receive notifications from other sources, like the Social Security Administration, it is advisable to reach out to them directly to understand the steps to take regarding account closures.)
Review your credit reports
Tsitos advises checking your credit reports to see the cards on which you were an authorized user and how they are reported by the issuers to the credit bureaus. Different card issuers handle authorized users’ payment activity differently when reporting to the bureaus.
When the issuer closes the deceased person’s card, you will notice a closed account on your credit report. This may temporarily affect your credit scores, similar to the impact of closing one of your own credit cards.
“Some variation is normal,” Tsitos explains.
Apply for a new credit card
If you wish to have your own credit card account, the next step is to search for suitable cards and submit an application. The application process will require your financial details, which can be challenging if you are a non-working spouse or retired without a source of income.
However, you can report income from various sources such as investment dividends, retirement account withdrawals, Social Security benefits, public assistance, or financial support from another individual (e.g., a relative).
One option is to consider applying with the issuer of the card on which you were previously an authorized user, as you are somewhat familiar to that bank. You may also explore secured credit card options, which are often easier to qualify for with limited credit history.