Pay Off Step Daughter's $5K Credit Card Bill?

Dear Credit Card Adviser,

My stepdaughter owes $5,000 on her credit card. My wife has access to her online credit card account and she's an authorized user. Can I use my savings account information to pay it off online? Or will my bank and/or her credit card company decline the transaction since not even our last names are the same?

- Robbie

Dear Robbie,

Paying off the bill using a savings account could be tricky, but not for the reasons you cite.

While federal law doesn't directly prohibit using a savings account to pay a bill online, Regulation D "limits your ability to make more than six transfers" per month from a savings account, explains Leonard Chanin, a partner at law firm Morrison and Foerster LLP, which represents banks and other financial services companies.

The law is in place to essentially protect bank reserves. Customers who go over the limit may have their transactions declined or face an excess activity fee. And if you make more than six transfers per month on a regular basis, the account could wind up being closed or converted to a checking account.

In other words, your good deed, as envisioned, could carry repercussions.

You could theoretically pay off the debt using your savings account and micromanage your monthly transfers. However, "there might not be the option to make a third-party payment from a savings account," says Nessa Feddis, senior vice president of consumer protection and payments at the American Bankers Association. Instead, you could use a checking account to make a payment.

As for the names not matching, typically, when you go to add an account to make a payment, "there's no field for names," Feddis says. Instead, all the financial institution asks for is an account number and a routing number, so the difference isn't likely to create a problem.

Remember there are still checks and balances in place "to ensure that you actually have authorization to use that account," Feddis adds, so you could potentially run into a speed bump or two.

For instance, many financial firms conduct a few test withdrawals once a customer attempts to link a checking account to their credit card. The customer is then prompted to enter the amount of these debits -- therefore verifying ownership of or access to the account -- before it's officially added as a payment option.

Since your wife is an authorized user on the account, you may be able to jump through this and any other hoops without too much of a hassle. However, "if it's just a one-time thing, it may not be worth it" to link accounts electronically, Feddis says.

Instead, you could just write your stepdaughter a check for the debt. If you're worried this check won't go toward paying off the bill, you could deposit the money into whatever account your wife uses to pay the credit card and have her pay the bill, says John Ulzheimer, president of consumer education at CreditSesame.com.

Or keep it even simpler.

"You can make a payment on someone else's account using the old-fashioned paper statement process," Ulzheimer says. "Write a check for the amount due and stick it in a payment remittance envelope."

One last thing, and this is just from a personal finance perspective. I'm not sure how old your stepdaughter is, but by paying off her debts, you are not teaching her to be financially responsible for her actions. Plus, you could also be jeopardizing your own financial well-being down the road. Here's to hoping this is just a one-time thing to get her on her feet again.

Good luck.

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