credit-card-protection-insuranceCredit card protection insurance is offered to card holders to offer security in the event of unemployment, disability, injury or death. Your credit card issuer may offer this protection as credit card protection insurance, payment protection, credit shield or a variety of other names. The concept remains the same: you pay a monthly fee (normally based on your balance) in order to have an extra cushion of protection should you find yourself unable to pay your monthly bill. In most cases your payment would be put on hold for a predetermined amount of time without incurring interest charges or other penalties generally associated with the inability to make payments each month. If you find yourself facing a personal or financial hardship this policy will help protect your credit and keep you in good standing with your creditors until you are back on your feet.

Understanding Credit Card Protection Insurance.

Sounds too good to be true, right? As with any other contract you need to read the fine print before signing on the dotted line to ensure you fully understand the policy and requirements to qualify for protection.

  • Fees- Purchasing credit card protection insurance is similar to any other form of insurance. You pay a fee in the hope you never have to use the policy. With that in mind you need to weight the cost of the fees with the value of the protection it provides should you find yourself putting this insurance to use. On average most credit card companies charge around 50 cents for every $100 of your balance. This can add up quickly for consumers who carry a high balance or are unable to pay the balance in full each month.
  • Eligibility- You must have your credit card account in good standing to qualify for most payment protection plans. If your account is currently over the limit,  have a history of late payments or are unemployed at the time of enrollment you will not be eligible for this added protection.
  • Claiming your benefits- If you qualify and choose to pay the fees associated you should know that claiming your benefits can be tricky if you find yourself facing certain hardships. Unlike other forms of insurance, credit card protection insurance is not regulated by the state or federal government. In effect it is basically a contract between the lender and credit card holder. Unfortunately in many cases the credit card issuer will look for any reason to disqualify or reject your claim and you may be left responsible for maintaining your payments regardless of the money you have already paid for “protection”.

Purchasing credit card protection insurance is a personal decision and should be based on the your unique situation. In some cases it may be worth the cost or you may just decide to put the amount of that monthly fee into a personal savings account to fall back on in the event you find yourself unable to make your monthly payments.



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