Are credit card protection plans worth the money? In a word, no. Here's why.
Here’s a question I got from a viewer yesterday:
Are credit card protection plans really worth the $9.99 / mo? They say they will protect you if someone uses your card without you knowing, such as fraud or stolen and charging any amount on your card.
Every time I try to cancel the protection plan they talk me out of it because I cannot prove that it would not protect me. Some of my other frends have cards and have had no problems and others have but they do not have the protection plan. Can you steer me in the right direction? Thank you for your time.
And here’s your answer, Will.
No, credit card protection plans are not worth the money. Keep in mind that if your card is stolen or used for fraudulent purposes, you’re only responsible for the first $50 of charges, and even that amount is waived by most companies. When your card is ripped off, your primary problem isn’t money: it’s keeping your credit history from being ruined in the process. And that’s normally a matter of your time, not your money, as you contact credit reporting agencies to have the falsely recorded overdue charges removed.
There are also protection plans that offer to pay your bills if you should be laid off or get sick: those aren’t normally worth the money either. Here’s a recent story we did on that: Are Credit Card Protection Plans Worth It?
Got a question for me? If it’s a topic that’s of general interest, let it fly!