Recent studies show that credit card protection plans, often advertised as a way to guard against unexpected events such as unemployment or illness, are not only expensive but also provide little in return.
According to the Government Accountability Office, consumers spent $2.4 billion on credit card protection plans in 2009 while credit card companies only paid out $518 million in benefits. Ouch! So why is it such a bad deal?
Some credit card issuers may charge up to $1.35 for every $100 of your card balance. If you have a $1,000 balance, that means the credit card protection plan could cost you a whopping $13.50 per month! Not only is it expensive, but even bigger problems arise when you actually need the benefit and can't collect. Credit card protection plans are notorious for forcing you to jump through lots of hoops, and benefits are often denied in the end.
Save yourself the money and headache by using your credit cards wisely and only buying what you can afford to pay off every month. That's the best credit card protection you can provide for you and your family.
