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...when do creditors stop handing out credit? When do they start decreasing credit limits?
Let's say you're 70 and you have 5-10 credit cards with a combined limit of ~$100k. That's not very far-fetched. I'm 35 and have limits half that. What's to stop someone with that credit from spending a lot of that money and then making minimum payments until they die? Hell, what if they know they're dying within a year or two? Credit card companies can't see their medical records. Is there anything preventing them from running up tens or hundreds of thousands of dollars worth of debt before they die? IS THAT WHY MY INTEREST IS SO HIGH ON MY CREDIT CARDS?! I'LL MURDER YOU OLD PEOPLE!!
most older people want to leave money to their families, especially their kids. If you die with a huge debt, they get nothing, and all of your property (including your family home) will get sold to pay your debt.
The correct answer is nothing, but its generally risky and the reward is limited. Its basically the same reason that 70 years old don't do heroin. They just keep doing what they've been doing. They mostly try to enjoy time with their loved ones, have sex with other elderly people, stay healthy, and hope to live for another 20 years.
I've worked in credit cards in fraud and collections. Nothing stops you. A lot of old people have done it.
Usually, they run up their cards because of inadequate retirement savings and they charge a little each month to cover food, rent, or medicine. With those people we have little recourse as their assets are basically nil.
Once in a while someone does exactly what you are talking about usually buying a ton of stuff right before they die. But usually people are so ill can't actually get out to the store to buy the stuff themselves. So they give the card to relatives or give the relative their own card on their account as an authorized user or co-signer.
If someone racks up a ton of debt and has assets the Fraud dept will get involved.
One of two things happens.
1) We put a claim against their estate. While credit cards are unsecured credit we can still put liens against the estate. If their only asset was the home they owned that will have a lien on it. So if you want to pass anything on to your kids the card companies will make sure they get their share.
Unsecured debt is last in line for any payouts on assets with secured debt like mortgages and car loans having first cut on the assets they are secured with. Retired people have usually paid off their homes so we would could get first dibs if we file our lien before other debtors.
2) Once the person dies their account is closed as of time of death. Fraud has caught a surprising number of people using credit cards after death. Often they are authorized users who have a card but are not account holders so the charge is fraudulent. The threat of jail time if they don't pay often gets people to take on a large amount of debt they thought would be clear.
If you are a co-signer then you are now on the hook for the whole amount.