Are Credit Card Protection Plans Worth It?

MONEY TALKS NEWS – As unemployment hovers near historic highs, some companies are feeding on the fear with protection plans designed to help if you get laid off.

For example, one product being pushed by purveyors of plastic these days is credit protection. You enroll in the plan, then should you you end up here at the unemployment office, they make your minimum payments for you for up to 2 years. Sounds comforting. But problem one? It’s pricey protection.

The cost of these plans runs:

  • $.50 to $1.00 per hundred dollars of credit card balance
  • If you carry a $5,000 balance, that’s up $50 a month, $600 per year.
  • And it’s added to your balance, so you’re paying interest on it.

Fine print? You can’t buy it if you’re already unemployed or if you’re only part-time. Did we mention there are exclusions. All these policies are different and have exceptions.

A quick Google search online will show all the complaints about slow-payers and no-payers in the protection plan business. It’s a bit scary.

If you know you’re going to be unemployed in the next couple of months and you’ve got a big balance, maybe one of these protection plans makes some sense. Otherwise, you might be better off using that protection money to pay down that balance.

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Comments & discussion

We welcome your opinions, but let’s keep it civil. Like many businesses, we reserve the right to refuse service to anyone. In our case, that means those who communicate by name-calling, racism, using words designed to hurt others or generally acting like an uninformed bully. Also, comments that include links to email addresses or commercial websites typically aren't posted. This isn't a place to advertise your business.

  • http://www.ManyMoneySavers.com/ Am

    From what I understand, if you are self-employed in any capacity and lose your job/clients/whatever…you don’t qualify for the credit card protection coverage. Let’s say you run an at home daycare and you lose all the kids you are caring for due the down slide in economy…you are out of luck when it comes to paying your credit card bills. You are not eligible to receive payments from credit card protection.

  • http://www.ManyMoneySavers.com Am

    From what I understand, if you are self-employed in any capacity and lose your job/clients/whatever…you don’t qualify for the credit card protection coverage. Let’s say you run an at home daycare and you lose all the kids you are caring for due the down slide in economy…you are out of luck when it comes to paying your credit card bills. You are not eligible to receive payments from credit card protection.

  • Craig

    I HOPE THIS HELPS MANY PEOPLE:
    I had that credit protection crap. It was not worth the money or time. it only stops the finance charges and the over the limit fees. It is a bad service. You have to send in lots of paperwork and the card companies give you a run around about they did not recieve it in time.. Oh you only have a certain amount of time for this service. Well a little to late but I got rid of that service after phone calling and talking to 30 different people. I had that charge taken of my credit cards.. DON'T GET IT, JUST SAY NO.

  • Craig

    I HOPE THIS HELPS MANY PEOPLE:
    I had that credit protection crap. It was not worth the money or time. it only stops the finance charges and the over the limit fees. It is a bad service. You have to send in lots of paperwork and the card companies give you a run around about they did not recieve it in time.. Oh you only have a certain amount of time for this service. Well a little to late but I got rid of that service after phone calling and talking to 30 different people. I had that charge taken of my credit cards.. DON'T GET IT, JUST SAY NO.