Many people are offered a protection plan when they get approved for a credit card. Is there value in these plans or is it a money maker for the credit card companies?
It is crucial to read the terms and conditions of these programs if you are interested in signing up. No universal plan offers the same coverage. Some credit protection plans are better than others.
Many people today are considering this kind of credit card insurance coverage. In today’s economy, a credit card protection plan seems worth considering. Many people decide to enroll because they want peace of mind in case of something happening with either their job or health.
What kind of benefits will I receive, if my claim for credit card protection insurance gets approved?
If you are found eligible to collect benefits the interest on your account will stop accruing. You will not be required to make payments on your account, but you can not make new charges either. You will not be charged late fees during this time.
Typically it is tough to claim coverage on most of these plans. If you quit or leave your job by your choice, you will not be covered. If you are self-employed, you can not collect benefits. For obvious reasons, anybody that is self-employed should not sign up for this coverage. If you were terminated from your employment, you have to wait 30 days before reporting your status. Also, you need to prove eligibility by showing that you have applied for unemployment benefits. Even if you qualify your benefits can be denied or your policy canceled. If this happens to you, there is very little recourse that can be taken to collect.
What is required to participate in a credit card protection plan?
If you choose to participate, you pay for your protection plan each month through your credit card bill. A percentage that is typically a half percent of your balance is charged to your credit card account each month. Some credit card companies will charge you more for their credit card protection plan.
The only way to avoid this credit card fee is to pay your credit card balances off completely each month and charge anything. You will be charged interest on the money you are charged to pay for this insurance. The more you use your card, and the more money that is rolled over each month, the more you pay for this insurance. You can have your credit card for ten years before needing to use your benefits. Year after year you could be paying into this plan more than you will ever come close to taking out. Most people never even file claims. Some people get denied for coverage.
We do not recommend that cardholders sign up for these types of protection plan policies. The benefits, benefit only a few. If you feel as though you need some policy, you can try to find a private insurance company. The rates may or may not be more reasonable. Even then you may conclude that these policies although better are not a good value.
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