Should I Get a Credit Card Protection Plan?

In theory credit card protection sounds like a good idea. If a consumer has a credit card protection plan and is no longer able to pay the balance on the credit card due to job loss or illness, the credit card protection will cover the minimum payments of the credit card until you are able to get back on track.

This is great, but there are some factors to seriously think about before opting into a credit card protection program.

Consider: Costs

Consider the cost associated with a credit card protection program. Typical programs charge approximately 75 cents for each $100 of loan coverage per month. If you are carrying a balance of $6000, the credit card protection will cost you $44 a month or $528 a year.  

Whether it is worth it to pay for the insurance or invest the extra money towards paying off your debt truly depend on your personal situation. If you have a substantial amount of credit card debt and are extremely ill or fairly certain that you will be out of a job shortly and do not have the funds saved to pay off the debt, then it might be a good option.

Consider: Potential scams

If credit card protection sounds like something you want to take advantage of, you should remember the old saying “buyer beware.” The Federal Trade Commission have warned consumers about telephone-scammers who try to sell costly and unnecessary credit card insurance.

Earn More Perks From Your Credit Card

The scam artist will try to intimidate the potential victim with stories about how the laws for credit card protection are changing and that the victim will be liable for fraudulent charges. That is a flat out lie as the Federal Trade Commission legally mandates the cap of your liability for unauthorized charges at $50 maximum.

Most experts avoid not wasting your money on credit card protection policies while the people that sell those plans say it is a great way to protect yourself. You must analyze the risk and costs thoroughly and decide for yourself.

About the Author

GOBankingRates Staff

These articles are written by the in-house GOBankingRates team.

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