Today, the credit card has become a part of every pocket. Especially in cities, where youth consider it both status and facility. From online shopping to restaurant bills and holiday booking, the credit card has made life easier. But behind this glitter, there is one such shadow of debt, which is overshadowed many times.

And what will happen if the credit card user dies suddenly? Who will pay his outstanding debt? Let us find the answer to this question in the light of law and banks’ rules.

Credit Card: Convenience or Trap?

Credit card is a small plastic card, which resembles the debit card, but does the work completely different. The debit card spends your account money, while the credit card has borrowed money from the bank. This loan has to be repaid in a fixed time. Nowadays every need of life is being fulfilled by credit card – shopping, bill payment, traveling. But without thinking, it can be converted into a quagmire of debt.

Credit card is not less than a boon in difficult times. The bank gives you a grace period, that is, there is no interest on repaying the full arrears till the last date of the bill. But if you miss this opportunity, a small debt can also become a mountain with heavy interest. This is the reason why it is necessary to use the credit card wisely.

Debt account after death

Most credit cards fall under the category of unsecured loans. That is, to take them, you do not have to keep any guarantee, such as property or jewelry. The bank offers a card based on your income, credit score and record of paying old loans. But if the cardholder dies then what happens to the outstanding debt?

The law states that the debt of the unsecured credit card usually ends with the death of the cardholder. That is, family members do not have to bear this burden. However, the bank first tries to recover the dues from the property of the deceased, such as bank balance, property or investment. If nothing is found, the bank puts the debt into a butt account, that is, tolerates the loss itself. In such a situation, the family does not need to worry, because unsecured debt does not come on their heads.

Separate rules of secured credit card

The case of secured credit card is slightly complicated. These cards are received by those who have low credit score or income are uncertain. The bank asks for guarantee before giving such cards, such as fixed deposits (FD). If the cardholder dies, the bank first collects dues from FD. If the additional amount is left in FD, it is returned to the heir. The loan of a secured card is not forgiven, as the bank has already ensured its security.

Caution in credit card use

The brightness of the credit card is attractive, but its risks are also no less. By taking care of some things, you can avoid the debt trap. Always repaid the bill on time, as the delayed interest as well as the credit score is also bad. Do not only pay the minimum due amount, as it causes the debt prolong.

Avoid spending close to the credit limit, otherwise the Cibil score may be affected. Cash withdrawal from credit card is expensive, as it imposes immediate interest. Repeated choosing EMI also increases debt, so limit it to the necessary purchase. Do not spend the greed of the reward points and do not keep several cards without need. Be sure to check the statement every month, so that the wrong charge or fraud can be avoided.