Should You Consider Purchasing a Credit Protection Plan?

Credit card issuers are perpetually offering cardholders the opportunity to sign up for additional account services designed to afford them a great measure of protection against unforeseen circumstances which may prevent them from being able to make their payments on time such as job loss, disability or divorce. In most cases, people decline the coverage. However, in this time of country-wide economic uncertainty, are these credit card protection plans or “credit insurance plans” worth considering? Is the coverage worth paying a monthly fee for or are protection plans just a way for credit card companies to make even more money off of consumers? What The Protection Plan Covers Each credit card protection plan varies from card to card, as does what, specifically, they cover. Because of this, you must take the time to really look at what is covered under the particular plan you are considering. In most cases, account protection coverage can be activated should you suffer a disability that renders you unable to work or if you outright lose your job. If you are deemed eligible for coverage, then no interest will accrue on your outstanding balances, nor will late fees be applied for a certain period of time. Additionally, you will not be required to make your minimum monthly payment. It should be noted that you will also not be able to use your credit card during this period, either. The cost of such a plan is typically a percentage of your balance that you pay monthly. If you do not carry a balance then there is no fee. Beware of the Eligibility Requirements While a credit card protection plan may sound like an amazing thing to have in place should you become disabled or lose your job to ease your financial strain, the truth is that it can be rather difficult to submit a claim for coverage. If you’re unemployed when you activate the plan you are not eligible, nor will you be eligible if you quit a job or leave voluntarily. Nor are you eligible if you are self-employed. If were a full-time employee who was laid off, there may be a waiting period of 30 days or more before you can file a protection plan coverage claim, and you should be prepared to prove that you filed to receive unemployment benefits from the government. Protection Plan Fees The average charge for a credit card protection plan is fifty cents for every $100-worth of any outstanding balance. Some credit card companies charge even more. Therefore, the more charges you make to the account, the more expensive your coverage becomes. It is worthwhile to note that all credit card protection plan fees are added onto your credit card statement as with any other purchase and thusly are subject to interest charges. The advice that many financial experts dispense is that you will likely benefit more from purchasing your own insurance coverage that extends to your credit card bills. Not only are the premiums generally lower but the insurance companies are often times more reputable and will help you find the best combined coverage befitting your individual situation.