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Credit Card Plan: Is it Necessary?

Credit Card Plan: Is it Necessary?


Credit card protection or insurance will provide coverage for the minimum balance or suspend payments on a covered credit card account. Generally, this coverage will include disability, life accidental, death and unemployment coverage. The state insurance commissioner regulates the rates for this coverage. If you have a large outstanding balance on your account and is not covered by other policies like supplemental life or disability coverage, consider purchasing this type of coverage.

This type of coverage will also protect your credit rating while suspending or paying your monthly minimum payment. In addition, you can purchase coverage for identity theft.  By paying up to $15 each month, your insurance will protect you if someone uses your card or card number for fraudulent activities.

If you have this type of insurance and had no choice but to use it, your card company will suspend your account. Usually, the cost of credit card plan is between 15 cents and $1.50 per $100 of outstanding credit card debt. Therefore, if you have an outstanding balance of about $10,000 at a rate of 75 cents per $100, you add $75 to your monthly payment.

The truth is, the cost of purchasing credit card insurance definitely outweighs its benefits. It is not recommended to purchase this type of insurance at all.

 

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