Whose Credit Card is it Anyway?
Here’s a scenario related to credit cards that plays out far too often. To some degree it’s a problem from the past, but it still affects older people today. It has the potential to affect younger people too if they’re not careful.
Auntie: But why did the bank take away my credit card?
Nephew: The bank thinks it’s your husband’s credit card, and when he died they cancelled it.
Auntie: But it has my name on it.
Nephew: Yes it does. But that card was created as an added card on your husband’s credit card account, even though they printed your name on it.
Auntie: How was I supposed to know this?
Nephew: I’m not sure. The account statements show your husband’s name, which tells us that the bank considers it to be his account. But many people don’t know that this is how it works.
Auntie: Why won’t the bank give me my own card now?
Nephew: The bank’s computers don’t know who you are.
Auntie: But everyone at the bank has known me for decades.
Nephew: Banks aren’t run the way they used to run. What you think of as the bank is just a bank branch. Workers in bank branches aren’t allowed to make any real decisions any more. All decisions are made by the bank’s headquarters through their computers.
Auntie: Can’t we ask the people at the branch to talk to headquarters about me?
Nephew: I don’t think it would help. The bank’s computers rely on your credit history to make decisions about you, but you don’t have a credit history.
Auntie: But we had a mortgage and paid it off, and we’ve had credit cards for many years.
Nephew: Yes, but as far as the bank is concerned, all that took place in your husband’s name.
Auntie: So I’m a nobody even though I earned some of the money that paid our debts?
Nephew: Sadly, computers aren’t good judges of character.
Auntie: What am I going to do?
Nephew: I can help you apply for a low limit credit card to help you build a credit history. We might have to get a secured credit card which means we’d need to give the credit card company several hundred dollars as collateral.
Auntie: I’ve been having trouble accessing my bank accounts too. How can I get this collateral?
Nephew: I can help with money until we sort this out. All the banks have slightly different procedures for dealing with accounts when someone dies. It’s hard to predict what they’ll expect from us to get access to your money, but I can go with you to talk to them.
Auntie: I don’t even have enough cash right now to buy groceries.
Nephew: The bank may allow you to withdraw some cash. If not, I’ll pay for your groceries.
Auntie: Why did my husband leave me in such a terrible financial state?
Nephew: He probably didn’t know it would turn out like this. He probably thought you’d be able to continue to use your credit card and bank accounts without interruption.
Auntie: More people need to know about these problems so they can fix things before someone passes away.
Nephew: I agree.
Thanks Michael. Always on point!
ReplyDeleteGlad you liked it. Maybe I need to use some AI to turn dialog into a short video.
DeleteThis conversation rings true, Michael. I'm in the midst of similar conversations in my own life with the passing of a close relative who held accounts at multiple financial institutions. Unwinding these many accounts after the fact has been a slow, painful process. Every bank seems to handle the estate process in a uniquely frustrating way. Can't help thinking that all this trouble could've been avoided with some much shorter conversations and a bit of planning/simplifying before his passing.
ReplyDeleteYes, my sense has been that the big banks appear to be above the law.
DeleteThis is a familiar story to me. As such, we made sure my wife had her own credit card account in her own name. We expect to retire in a couple of years. What I did not know is that there might be issues with our joint bank accounts. Our two main accounts, chequing and savings, are in both are names, as is our HELOC for our leveraged investing.
ReplyDeleteIs there some action we should be taking now to ensure there is no drama when one of us passes? This is a bit of a revelation for me - and while I expect our children will some day be needed to help us, I want to avoid as much of these challenges as possible (or at least make them a smooth transition). Any advice would be welcome!
I've heard of cases where joint accounts were blocked, and other cases where the surviving spouse had uninterrupted access to joint accounts. Your bank may be able to give you useful answers about what would happen if one of you passed. My wife and I maintain separate accounts, so this isn't an issue I've looked into much.
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