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News India Live, Digital Desk: The use of credit cards is increasing rapidly nowadays. This has not only become an easy medium of expenditure among people, but attractive offers, discounts and EMI options are also attracting people towards it. The credit card also provides a type of short term unsecured loan facility, which can be paid without interest in the fixed time (grace period). However, if the payment is not made within the stipulated time, the card holder may face heavy interest.
What does the bank do when the card holder dies?
The loan of credit card falls under the category of unsecured loans. This means that you do not need to mortgage anything for this loan. But if the credit card holder dies and the loan is left on it, then the bank considers this amount as ‘bad date’ or ‘submerged debt’. In such a situation, the bank cannot recover that dues from a member of the deceased’s family.
Rules on secured credit card
There are now some credit cards available in the market for which customers have to deposit the amount as fixed deposits (FD) with the bank. Such cards are called ‘secured credit card’. This card is usually given to those who do not get a normal credit card. If the bill of this card is not paid for any reason, the bank has the right to sell his money by selling the deposit FD.
Card holder’s death rules on personal loan repayment
Personal loan is also an unsecured loan, in which the bank does not mortgage any property or goods. Therefore, just like a credit card, in the case of personal loan, it is the responsibility of the person taking the loan. If the person dies during the loan period, the bank cannot recover the loan from any member of his family. In such a situation, that loan is considered to be finished.
Summary
- The bank cannot recover from the family when the card holder dies on the unsecured credit card loan.
- The bank has the right to recover from FD deposited in the Secured Credit Card.
- On the death of a personal loan taker, the loan ends automatically.