Why You Shouldn't Be Interested In Credit Protection Insurance"Payment protection plan" are the words that you hear sometimes when your phone rings. Just hang up the calls. Don't ever buy credit protection insurance. It is nothing but a consumer rip off that has affected millions of people. The Federal Trade Commission, in fact, gives a strict 'No' advice to such plans. There are many reasons for which you should not buy such credit card or other credit insurance services. For example, the working of such programs is very complicated, and it's a bad deal for any average consumer. Why are these plans sold? Well, there have been instances when credit cards are used illegally by others without the concern of the owner. In such cases, the owner has to pay heavy amounts to the banks or credit card agencies. Then, sometimes, due to illness or other circumstances, you may be unable to work. In such cases, your debt or statement balance in the card cannot be paid. With these ideas, the payment protection plans are sold to customers by telemarketers of fake companies. The representative of such company would ask for information of your account and other details with an impression that they are from the security departments of your bank. They are from a theft ring with forged policies, so beware! Even big credit card departments offer such reclaim policy on credits. They may be genuine, yet they have demerits. The representatives of insurance plans from the bank will advise you to buy credit insurances. They convince you that the insurances would provide settlement for your minimum monthly payments to credit accounts for a period of 12-24 months. Such plans sound pretty impressive. After all, if you become suddenly ill, you won't be able to pay the credit accounts. This can be avoided if you pay your balances on credit cards every month without a miss. If you do that, you won't need any credit insurance. If your credit balance remains zero, you don't pay any interest or fee. Finance experts have calculated that the premium paid for such insurances in a year is more than the interest charged on balances. It's simply a waste of money which is really a staggering amount. There are simply no enhancements to your credit rating. There is another factor, too, in credit card plans. The eligibility requirement for such policies is very restrictive. If you read properly the documents of credit protection insurance, you will realize that many situations are not covered by this solution. They say about medical conditions, but there are exclusions of pre-existing ailments or health problems. Besides this, many other loopholes are there based on which the bank or the credit card agencies will deny your claim. Instead of paying high premiums, it's better that you pay off the balances. |