Author: Marc Klein
February 23, 2023
What happens if you have an emergency and need help with your credit card bill? Learn about credit card payment protection, how it works, and if it’s right for you.
If you have a credit card and want some protection in case you experience an emergency and can’t make your payments, that’s where credit card protection insurance comes in.
Credit card protection insurance is an optional program you can pay for which allows you to temporarily pause your credit card payments if you’ve had an emergency, or your credit card issuer would make the minimum payments for you. This can keep your account in good standing instead of falling into delinquency when the unexpected occurs.
Terms may differ depending on the card issuer, but credit card protection insurance starts with enrolling in the program and paying a monthly fee, which is generally based on your balance—the higher the balance, the higher the fee. The monthly fee applies to coverage for the next billing cycle. For example, it might be $1 per $100 balance, or part thereof. So if you have a $475 balance, the fee will be $5.
If you experience certain hardships—sometimes defined as involuntary unemployment or disability—you can activate the program which then allows you to stop making payments for a period of time. Credit card protection insurance may also cancel a balance owed if a cardmember dies.
It sounds simple, but there are some details you’ll want to verify before you jump in and start paying for the program. Each credit issuer has specific eligibility requirements, conditions, and exclusions which you’ll want to be aware of to ensure that you qualify for protection. Some examples of eligibility requirements include:
You should be able to read the full list of requirements and other details of your credit issuer’s program on their website or in your card terms and conditions.
If you’re trying to determine if credit card protection insurance is worth the cost, you may want to weigh some of the potential pros and cons of paying for it.
You’ve weighed the pros and cons and now you’re trying to decide if credit card protection insurance is right for you. There are some other factors you may want to consider:
These are just a few factors to consider before deciding if credit card protection insurance is right for you. There are also other ways to protect yourself financially should an emergency occur.
While credit card protection insurance may work for some, there are alternate options you can consider for protecting your finances in case of an emergency:
If an emergency occurs, the last thing you want to worry about is having to pay a credit card bill on top of whatever financial burden the emergency has caused. You also don’t want to miss payments and watch your credit score suffer. This is where credit card protection insurance can come in handy—it allows you to deal with your emergency while also pausing your credit card bill to remain in good standing with your credit issuer.
However, it’s important to know the details of your credit issuer’s policy before signing up, consider alternative options, and weigh it all with what fits into your finances and lifestyle the best.
About the author:Marc Klein
With his eyes set on becoming the next great ad man (at least until his comedy writing career took off), Marc earned his journalism degree and went straight into advertising for various gaming and tourism clients. He later expanded his credentials to include public affairs and communications work for several environmental science organizations before returning to his marketing roots. A lifelong scholar with recent studies in strategic communication, Marc enjoys tying humor into his writing and simplifying complex financial subjects into engaging and easy-to-digest content for a wide variety of audiences.
This material is for informational purposes only and is not intended to replace the advice of a qualified tax advisor, attorney or financial advisor. Readers should consult with their own tax advisor, attorney or financial advisor with regard to their personal situations.
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