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Debt Management

The best last-minute gift: Paying someone else’s credit card debt

Helping a loved one pay off some of their debts could be the best present you give this holiday season


It’s one of best gifts many can receive: help with paying off debts. If you’re thinking of helping a loved one pay off credit card debt, no matter the amount, the process is easier than you think. And the impact could last a lifetime.

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If you know a friend or relative is bending under the weight of high credit card bills and you’re stumped for just the right gift, consider a contribution to that person’s liabilities. It may be the most meaningful and practical present you could give.

A 2019 Country Financial survey found that 70% of adults are experiencing stressful money problems this holiday season, and roughly half of them would rather have a debt paid off instead of a luxury item or even a vacation.

Although you may not be able to bring that person entirely into the black, you can offer valuable relief with a financial gift of any size. Here is why helping someone reduce a pressing credit card balance would be so appreciated, and how to go about making such a precious gift happen.

See related: 5 ways to maximize gifting for good

Debt relief is memorable and impactful

When you help someone manage an overwhelming obligation, you help them breathe, says Danny Ray, founder of PinnacleQuote Life Insurance Specialists. As someone who has been on both the receiving and giving end, he understands the impact.

“I remember how I felt when my debt was paid down,” says Ray. “Before I got married, my mom handed me a check for $20,000. She knew how badly I was struggling, and she said, ‘Here, we will take care of this.’”

Even if you don’t have the means to make such a large dent, the money you give to help someone pay a bill will likely have a longer-lasting impression than many tangible items. In a recent study conducted by Groupon, more than half of the presents people receive for the winter holidays are forgotten by the following December.

The memory of someone paying a bill or deleting a debt when they’re barely making ends meet, however, can last a lifetime.

“When I think about it even now, 20 years later, I get choked up,” says Ray. “I can feel that weight relieved again.” The impact was so great that after he gained financial strength, Ray modeled his mother’s form of generosity and has since paid it forward. He gave a struggling friend $10,000 to cover her credit card debt when he found out she was in trouble. “For a gift, it is the best kind. It’s so gratifying to help someone struggling so hard to keep up.”

Credit card company representatives constantly field calls from desperate cardholders who are trying their best to dig their way out of debt. Many can’t meet their minimum payments and ask for a reprieve. According to one such Capital One representative, a covered payment would be an incredible surprise. If a person was about to fall behind on their billing cycle, a gift like this could help save their credit rating from the damage caused by a late payment.

No shopping required

As the countdown to Christmas morning (or birthday or any other holiday where a present is expected) ramps up, Becky Beach, a financial blogger from Arlington, Texas, says money for debt becomes an evermore appealing option for the giver as well.

In addition to the emotional reaction that easing someone’s debt load can elicit, there are benefits for the person who delayed shopping. One is the straightforward nature of money. An item of clothing with a hundred-dollar price tag might not carry the same value as a check made out to $100. You will also avoid crowded stores and malls, won’t be swayed to spend more than you can afford or pay extra for expedited shipping if you’re shopping online.

“It really is a better last-minute gift than a throwaway present or a gift card,” says Beach, who put the idea into practice when she paid off her sister’s credit card debt one year. “She was accumulating so much interest and was drowning in debt,” she says. “It felt good to help her erase her debt and help her have more cash flow each month.”

And don’t worry if the amount seems too “inconsequential” to impress. Those $25 you give toward paying off a balance are more special than a generic candle or trinket, assures Ande Frazier, CEO of the women’s financial education website myWorth. The gift, no matter the amount, will continue to be appreciated in the long term.

Weigh the potential negatives

Alleviating a person’s financial obligations isn’t a one-size-fits-all gift. Before going forth with the plan, consider what could happen if you pay off someone else’s debts:

Tax consequence

If you’d like to be especially magnanimous with your money, be aware of potential tax implications. As per IRS rules, in 2019 and 2020, you can give up to $15,000 to a person without it being a taxable event. Donate more than that and you might have to pay a gift tax on the portion that exceeds that threshold.

No good may come of it

You need well-reasoned faith that the person will use the money effectively for the gift to make sense. “If the indebted person was just irresponsible or has not been working hard to pay off the debt themselves, paying off credit card debt isn’t recommended,” says Laura Lonie, a financial coach and CPA from Buffalo, New York.

“They will likely rack up [the] credit card again and be right back in the same position – in credit card debt! I would only recommend it to people making a sincere effort to improve their life.”

Potential relationship damage

“I did have someone help me pay down my debt, and truthfully, I had two different feelings. I was certainly grateful to that person. But at the same time, I felt guilty and ashamed that I could not handle my own debt load,” says Larry Duffany, a financial coach based in Thomaston, Connecticut.

“The gift actually put a strain on my relationship with this person who is a close relative. To be clear, that relative approached me and offered the gift to me, and he has never made me feel ‘less than.’ However, I felt it just the same.” It’s extremely important to first think through all the possible emotional ramifications the gift could pose. Not everyone will react well, and you certainly don’t want an awkward exchange.

If it feels wrong on any level, step back and go the traditional gift-giving route instead. You do not want the gesture to hurt you or the person you love.

How to pay someone else’s credit card

When the concerns are laid to rest, determine the amount you’re comfortable giving. A good rule of thumb is to keep it to what you might have spent on a tangible gift.

If you want to take matters into your own hands, you can make a payment directly to the person’s credit card company. Policies do vary among banks, though, so check with the creditor. According to Brittney Mitchell, public relations specialist for Discover, it’s as simple as picking up the phone and telling the customer service representative what you want to do.

“The person calling in needs to have sufficient information to ensure that the payment is going to the right account,” says Mitchell. “An account number is always easiest, but as long as we can find the specific account, we can help the individual make their gift.”

Conversely, if a person has a Chase credit card, you would need prior authorization from the account holder to pay by phone, according to a Chase spokesperson. But you could make the payment by mailing a check or with a wire transfer – just be sure to include an account number as that will ensure the money is posted to the correct account.

Give festively

If calling an issuer isn’t really your style, make the gift fit the occasion. Frazier suggests writing a check and inscribe in the note section, “For debt and a great new beginning!” Pop it in a card with a heartfelt letter and you’re done.

Straight cash, on the other hand, is not recommended. If you’re giving a relatively small amount, it’s too easy for the recipient to put the money in a wallet and use it for things other than the intended goal. And more substantial amounts of cash are not safe to tuck into an envelope, as the money could get lost or even stolen.

But if a check isn’t cheery enough, get creative with packaging. Wrap the check around that person’s favorite candy bar or include it with a small, yet personal, item. You can also use a payment app such as Venmo.

How you choose to let the recipient know what you’ve done is up to you, but whatever it is, prepare for a strong reaction. What it will be depends on the person, though being shocked and dumbfounded is almost certain. “I think everyone who is given this gift feels that at first,” says Beach. “They may burst into tears and protest it before accepting it and hugging you.”

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The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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