I started taking out 0% BTs in March, and have since maxed out four credit cards with the offers. Because credit card companies now recognize what a "good" customer I am (carrying a balance as opposed to paying in full every month) I now get rewarded with daily credit card offers in the mail and almost-daily phone calls with special promotions, teaser offers, and rate cuts for both new and existing cards. Even companies that hold one maxed-out account are calling me trying to get me to take on MORE debt! But, the most surprising part is the "credit protector". Back when I never carried a balance on my card, I didn't even know "credit protector" existed... but now the credit card companies are presenting it to me like it's the newest, most exciting product ever. Well, maybe it is, but just for them. I get calls almost daily pushing this on me, so I've heard the spiel a dozen times or so, and it works like this... if you lose your job, are hospitalized, a family member dies, you get divorced (some of them count marriage and new babies as well), or some other horrible live-event occurs, they will either stop charging you interest, make your minimum payments for you, suspend minimum payments or some combination of the above three, as a very expensive courtesy to you. There are two catches.... the first is that they charge anywhere from $.59 to .$79 per $100 of your balance per month, and the second is that they can cancel at any time (like as soon as you lose your job?).
Let's think about that fee per $100 for a second.... We'll use my $14,000 BT as an example. My minimum monthly payments are about $210 per month. If I had credit protector at the cheapest rate I've been quoted, I would pay an additional $82.60 per MONTH (almost $1,000 per year!) for them to pay my minimums in the event of a personal emergency... that $82.60 does NOT go towards my balance. In the event of a personal emergency, they still have the option of "canceling at anytime for any reason", and whatever payments they either make or suspend, your balance does not go down. It doesn't take a personal finance genius to figure out this isn't a good deal. Instead, put that $80 towards your balance and pay the card off quicker.
I'm also wondering, since I've been quoted a wide-range of rates, if the rate changes based on credit. Would someone with poor credit be charged more than $.79 per $100 every month? I wouldn't surprise me. I see credit protector as a product they sell by preying on people that are not financially savvy and have a lot of uncertainty and instability in their lives. It's a shame that products like this even exist... if credit card companies are so worried that someone may be in over their head, the first thing they should do is stop offering them more credit.
13 comments:
That's weird. I had Discover push that on me recently and I've always paid off my balence in full every month, as I do with all my cards. They told me that they were offering it to me because I did that. The guy on the phone told me that it was free and wouldn't cost me anything, but the stuff in the mail said it was 80-some cents per $100 and I have a really good credit rating.
Yeah, it's free if you don't carry a balance! I have taken advantage of the free offers to try credit protector (gas gift cards, $50 rebates, etc.) and got snagged a couple of times for the fee (it was only a couple dollars but I was mad at myself for even giving them that much!)
haha, I hate those things with a passion.
when I called to activate my new Chase (bank one) VISA, I got bug BIG TIME about it.
the guy KEPT telling me its free since I have no balance, of course I didnt, I just got the card! He kept asking me to say "yes" so he can send the trial period sample.. and there's no obligation.. I just have to say yes.
"Do I have your approval?"
"no"
"but its free, and blah blah blah, so do I have your approval to send this free trial offer?"
"no"
"okay, you dont want to take advantage of blahblah blah, so do I have your approval to send this great offer?"
...
they also push those by sending you those $20, $30 checks.. if you sign the back and cash the check, you're enroll in the program. you can of course cancel it, but dont you wonder how long it takes to cancel it?
The Discover credit protector was more expensive than the rest, but I think they offered to give me a reduced rate after I said no about 49 times.
I have cashed those check they send, and then call and cancel as soon as they clear. It doesn't take any time to cancel really, the trick is remembering to do it.
Of course, savvy saver rightly rejected the proposal and took a commen sense approach, that she better reduce the debt with that amount. I am only left wondering, what the credit protector companies, are protecting, when there is no debt, in cases, where the amount is paid in full! Any way such system is not vogue in india, and as a finance man, I would very much like to know more about it!
Based on my age and health, signing up for the credit protector is about 30 times more expensive than term life insurance (this is a back-of-the-envelope calculation). Plus, of course, if I keel over, the term life payout gets would give my family enough to pay off the mortgage, transition my wife into another career, etc.
The credit protector just pays off the card, up to $10,000.
It's just expensive insurance, nothing more.
By the way, aren't you concerned about damaging your credit rating by taking advantage of so many credit card offers?
yeah u guys could take the smart aproach and take advanteage of the program if you know the program inside out and how not to be charged it's actually fairly simple, cancling is easy also just say "i'm retired" they don't care if you really are or aren't
Oh my! I "offer" credit protector as part of my job. When people take it, I feel a little bit of my soul being eaten away.
IF YOU DONT WANT TO BE BUGGED OVER AND OVER ABOUT YOUR CREDIT PROTECTOR PLEASE PLEASE JUST SAY... IM RETIRED... OR I DONT WORK, IM A STAY AT HOME FAMILY PERSON, I AM A SUP AT CREDIT PROTECT AND WE WILL CANCEL YOU RIGHT AWAY AND IT HELPS US OUT WITH OUR END.. THE REASON THEY BUG IS IT HURTS THEM IF THEY CANT REBUDDLE TWICE OR IF THEY CANT DOWN SELL YOU, PLEASE HELP US AS WE HELP YOU, JUST SAY " IM RETIRED " NO QUESTIONS ASKED YOUR OUT OF THE SYSTEM......
Credit card companies exist on giving people credit, so no wonder that they are looking for new profits when offering new credit. Well, money affairs need a person to be savvy on every financial matter he is involved in. The gold rule of a credit card consumer shold be: Do not apply for a new credit card unless you need it to death!
Citibank Credit Protector won't help if you're truly disabled! If you're unable to file a claim until you're well enough to go through the filing process, it's too late. There is no retroactive benefit. And, you can't file the "lost my job" claim after your disability ends because you've been on disability and don't satisfy the "I've been working for 90 days before I lost my job" clause. What a scam! If you're going to pay for this nonsense, please know the in's and out's before you buy.
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