If you have a credit card, then you will have been offered payment protection i urance to go with it
If you have a credit card, then you will have been offered payment protection i urance to go with it. You may or may not have taken the i urance, or it may have been included in your charges without you knowing. Many people have payment protection, but are u ure of its costs and benefits. Payment protection can be useful, but it is also expe ive and only worthwhile if you really need it. Here are some hints and ti to help you decide if payment protection is worth the money you pay for it:
What is Payment Protection I urance?
Payment Protection I urance, or I, is a type of i urance policy for credit cards. The policy covers your payments should you have an accident or illne or lose your jo . The idea is that if you ca ot pay your bill through no fault of your own, then the i urance will cover your payments. However, there are a number of pitfalls with such i urance, apart from the fact that it is usually quite expe ive.
Limited pay out period
One problem with I is that it only pays out for a certain amount of time. If you have a serious illne and ca ot pay for months or years, then this i urance ca ot help you. The usual maximum payment period is a year. However, the way the debt is paid off by the i urance should mean you are debt free after this period.
Hidden costs
One of the main problems with I is its cost. I usually costs 70 or 80p per 100 outstanding balance. This mea the cost is very high when you owe a lot of money, but you often dont realise this because the large numbers involved hide the charges. Also, if you pay by Direct Debit each month, by the time you have tried to claim the bill might have already been paid by the debit.
Rarely pays out
Another i ue with I is that the amount you area actually covered for is very small. You often pay for things that are of no relevance to you. For example, if you are self-employed you ca ot claim for most of the unemployment cover, but you still pay for it. If you are going to get I, then check to make sure that you have the cover you really want and that the policy is useful for you.
Other optio
Due to the problems with I, it pays to look at the alternatives. Obviously, one alternative is to not have I at all. It costs you money, e ecially if you have a large balance, and gives you few benefits. However, the best alternative to I from credit card companies is to get a policy from an independent company. These I policies are usually a flat rate of only a few pounds, and will give you cover in case you need it for much le money.
I can be worthwhile if you can afford the payments and you have a low balance. However, if you are self-employed and need to save money, then I is something you can usually do without.
What is Payment Protection I urance?
Payment Protection I urance, or I, is a type of i urance policy for credit cards. The policy covers your payments should you have an accident or illne or lose your jo . The idea is that if you ca ot pay your bill through no fault of your own, then the i urance will cover your payments. However, there are a number of pitfalls with such i urance, apart from the fact that it is usually quite expe ive.
Limited pay out period
One problem with I is that it only pays out for a certain amount of time. If you have a serious illne and ca ot pay for months or years, then this i urance ca ot help you. The usual maximum payment period is a year. However, the way the debt is paid off by the i urance should mean you are debt free after this period.
Hidden costs
One of the main problems with I is its cost. I usually costs 70 or 80p per 100 outstanding balance. This mea the cost is very high when you owe a lot of money, but you often dont realise this because the large numbers involved hide the charges. Also, if you pay by Direct Debit each month, by the time you have tried to claim the bill might have already been paid by the debit.
Rarely pays out
Another i ue with I is that the amount you area actually covered for is very small. You often pay for things that are of no relevance to you. For example, if you are self-employed you ca ot claim for most of the unemployment cover, but you still pay for it. If you are going to get I, then check to make sure that you have the cover you really want and that the policy is useful for you.
Other optio
Due to the problems with I, it pays to look at the alternatives. Obviously, one alternative is to not have I at all. It costs you money, e ecially if you have a large balance, and gives you few benefits. However, the best alternative to I from credit card companies is to get a policy from an independent company. These I policies are usually a flat rate of only a few pounds, and will give you cover in case you need it for much le money.
I can be worthwhile if you can afford the payments and you have a low balance. However, if you are self-employed and need to save money, then I is something you can usually do without.
