Credit Card Insurance - Is It Worth It?
When you apply for a credit card you always look for the deal that brings you the most benefit. You want to get best rewards and low interests rates. In other words, you want to get the most profit while paying as little as possible for the service. So, when you are offered credit card insurance the first thing that comes to mind is "do I really want to pay for it"?
First of all, you need to understand what credit card insurance is. Basically, this insurance covers your credit card payments in case you are not able to make them due to some specific reasons. You can get credit card insurance for most credit card deals.
There are three major types of credit card insurance.
- credit life insurance will help your dear ones avoid credit card debt in case you die without having paid off your balance.
- credit disability insurance will cover your payments if you are unable to work and pay off your balance due to illness or disability.
- credit voluntary unemployment insurance will help you make your credit card payments if you have lost your job.
Some people also think that they need some kind of insurance to protect their credit card accounts from fraud. However, according to the law liability for unauthorized charges is limited to $50. So if you are offered such "credit card fraud insurance" you should know that you are dealing with scammers.
Credit card insurance is not a free service. Some insurance companies will offer you an intro period so you could try having insurance free of charge but after that period is over you still have to pay. As with any other insurance the amount of money you pay depends on the insurance plan.
So, is credit card insurance a service worth the money you need to pay for? Of course, things like death, disability or unemployment is not something we expect to happen.
But what if you do suddenly lose your job? What will be the consequences? First of all, your failure to make payments will make your APR twice as high as it used to be. All you missed payments will be reported to all the three major credit bureaus. Your credit report will be damaged. You might end up filing bankruptcy that will stay on you record for 10 years.
One never knows what lies ahead. So the smartest way is always to protect your credit card account. The cost is not that high for the service that might help you save financial credibility.
So, compare all the offers. Just like you look for the best credit cards look for the most favorable insurance terms. Do not jump on the first offer you see on the Internet.
No matter what kind of plastic you use a cash back credit card or a gasoline credit card insurance is a useful financial tool. Compare the offers and find the one that will work best for you.
eysha 01:29 AM, November 28, 2007
it is very essential. insurance is such an important thing, and if you do it you'll see this wasn't in vain.
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