Many credit issuers really push the sale of credit card protection plans on their customers.
Why? Because they're extremely beneficial to the credit card companies' bottom lines. These plans basically claim they will help guard against an unexpected illness or job loss by paying off your credit card balance for you. However, while the marketing spiel may sound good to your ears, the reality is that they are expensive and provide little value in return for most cardholders.
In fact, you may find yourself paying well over $10 per month for the protection if you carry a balance of around $1,000.
Then, when the time comes that something horrible happens and you actually need to use the benefit, you'll likely be forced to jump through all sorts of hoops in hopes that you can collect some type of payment from the credit issuer. In the end, benefits are often denied and you're left completely hanging. If you want to provide yourself with the best credit card protection plan available, use a no annual fee credit card and make sure you only spend what you can afford to pay off in full each and every month.
If you don't have the cash to pay for it in the first place, don't buy it! That's the only way to use a credit card responsibly, and it will insure that you're never left worrying about how your credit card bill will get paid in the face of an unexpected emergency. Better yet, make sure you also build an emergency fund that will cover at least 6 months of expenses in the event of a job loss or illness. That way you'll never be tempted to charge an unexpected expense to your credit card that you know you won't be able to immediately pay off in cash when the bill eventually rolls in. Photo by Andres Rueda