The banks are always looking for new ways to make money. Over the past several years, one of their newest services is offering insurance to credit card account holders. This program varies bank by bank, but they typically work like this: for around 1% of your monthly spending, you can supposedly protect yourself in the event of death, job loss, or major medical catastrophe. This sounds like a good offer, right? Well, once you dig deeper, you will discover these credit card deals really aren’t a deal at all.
A Closer Look
Let’s take a look at the “Payment Protector” plan which is currently offered on Chase cards. They charge 89 cents per $100 of your monthly statement balance. That works out to be 9/10 of 1%, so for the sake of simplicity, let’s round that up to 1%.
For an extra fee of around 1% added on to all your account spending, Chase says they will defer your payments for up to 2 years for a disability, hospitalization, or if you lose your job; 4 months for a baby or marriage; and 1 month during one federal holiday per year.
This may sound attractive, but you need to realize that you are still responsible for paying that money back. All they are offering is to defer your payments if those things happen. But if you read the fine print, you will realize there are a lot of hoops to jump through in order to qualify… even if you do lose your job or have a disability. Your case has to meet their strict definition of those.
Credit Card Reviews? Thumbs Down!
All you have to do is read user’s credit card reviews of these insurance plans on the internet forums and message boards and you will see there are a ton of unsatisfied users. Simply put, they feel it’s just too expensive of a service. When you add up paying a 1% surcharge every month, that equals a lot over a period of twelve months.
Are The Any Worthwhile Benefits?
There’s only one benefit which appears worth while, but only for some people. It’s the death benefit; in the event you naturally die, they will pay off your balance, with a typical maximum of $10,000 to $25,000. For most people, this doesn’t make sense. However, it ma be worthwhile for certain higher risk categories of people (like senior citizens) who carry a large balance.