Are Credit Card Protection Plans Worth It?

Protection plans will make your payments if you loose your job, but are they 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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