What about credit card insurance?…is it a good idea?

And in this case I mean credit card payment insurance.

Essentially you pay some some small fee each month...usually 89 cents per $100 of balance you carry. If something bad happens and you can't make your minimum payment this insurance will cover the minimum payment for some period of time.

This is one of those questions where you (meaning me) really can't win.

If I say it's a bad idea you get hit with a bunch of "yeah but's". Yeah but my sister in law...yeah but my friend...yeah but my mother etc etc etc.

This post is a result of a call from reader Carl. He has about $10,000 total spread over 6 cards. This means he's paying $89 per MONTH for this insurance. Monthly minimum payments would total approximately $400 total for all these cards.

If you really like the idea of this insurance then self-insure! Set up a specific savings account just for this money. In this example in 4 months you have just about enough to cover your minimum payments for 1 month (4x$89)...in one year you have enough to cover you for three months.

At the end of two years (hopefully using my program) the cards are paid off and you've got a savings account with over $2000 in it.

So, personally I think you are throwing your money away paying this fee to a card company but your circumstances may be different.

Just be sure to read the fine print. What happens if you quit a job..does it kick in then? What if you are at fault for your injury. Are you covered?

Get those answers!

One Comment

  • Marion West says:

    I paid the thing for about 2 years to Capitol one they charged my account when a hardship came up they kept call for a payment I called the insurance # and asked how much they payed on my account the had never charged me. I stoped it right there. wish I had this info back then Thank you.

Leave a Reply

Your email address will not be published. Required fields are marked *