credit card insurance http://www.wisebread.com/taxonomy/term/6392/all en-US Credit Card Insurance? No Thanks. http://www.wisebread.com/credit-card-insurance-no-thanks <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/credit-card-insurance-no-thanks" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/credit_0.jpg" alt="credit cards" title="credit cards" class="imagecache imagecache-250w" width="250" height="250" /></a> </div> </div> </div> <div style="margin: 1em; float: right;"><script type="text/javascript"> digg_url = 'http://www.wisebread.com/credit-card-insurance-no-thanks'; </script> <script src="http://digg.com/tools/diggthis.js" type="text/javascript"></script></div> <p class="MsoPlainText"><span>So your <a title="Guide to Using Credit Cards Wisely" href="http://www.wisebread.com/credit-card-guide">credit card</a> company just called offering you balance protection insurance against <a title="I Lost My Job - Tips for the Recently Unemployed" href="http://www.wisebread.com/lost-my-job-tips-for-the-recently-laid-off">job loss</a>, disability, life, or critical illness. The cost will be just pennies, calculated monthly based on your outstanding balance. </span></p> <p class="MsoPlainText"><span>Do you take it? </span></p> <p class="MsoPlainText"><span>The question is: have you performed an insurance needs analysis, or will you just make the decision to take the insurance based on impulse and instinct? </span></p> <p class="MsoPlainText"><span> </span></p> <p class="MsoPlainText"><span>There are typically four different types of credit card insurance: </span></p> <ul> <li><span><strong>Involuntary Job Loss</strong>: This pays your monthly minimum payment for a specified period of time after you lose your job through downsizing or layoffs. </span></li> <li><span><strong>Disability</strong>: Like above, your monthly minimum payment is covered for a specified time period upon becoming disabled and unable to work. </span></li> <li><span><strong>Critical Illness</strong>: Similar to above.</span></li> <li><span><strong>Life or AD&amp;D</strong> (Accidental Death &amp; Dismemberment): If you die, your entire credit card balance will be paid. </span></li> </ul> <p class="MsoPlainText"><span> </span></p> <p class="MsoPlainText"><span>The cost may initially seem small at between $0.75 and $1.50 per $100 of outstanding credit card balance each month, but in the spirit of being frugal, is that money wisely spent? </span></p> <p class="MsoPlainText"><span>Consider the fact that with the exception of credit life protection, this insurance doesn't actually pay off your debt. It simply makes the minimum payments on your outstanding balance for the term of the contract. In fact, depending on the credit card and interest charges, you may sometimes find that the balance at the end of the contract is actually higher than when the claim occurred due to compounding interest. </span></p> <p class="MsoPlainText"><span>Are those minimum payments something that would cripple you financially in the event of an illness or job loss? The answer will be different for everybody - this is just food for thought. </span></p> <p class="MsoPlainText"><span> </span></p> <p class="MsoPlainText"><span>Similar to individual <a target="_blank" href="/critical-illness-insurance-for-wise-bloggers">Critical Illness</a>, Disability, or <a target="_blank" href="/choosing-life-insurance-term-or-permanent">Life Insurance</a> policies, there are a few things that bear consideration in order to make a sound decision:</span></p> <ul> <li><span><strong>What are the terms of the policy?</strong> (For example, what are the specific definitions under which the insurance company will pay)?</span></li> <li><span><strong>What coverage do you need?</strong> If you lose that income or become ill, will minimum payments on your credit cards be of benefit to you, or do you have other funds that will suit the purpose? </span></li> <li><span><strong>What coverage to you already have?</strong> There is no point in duplicating your insurance coverage if you already have a CI policy in place.</span></li> <li><span><strong>In the case of job loss insurance, what are the exact terms?</strong> You may be surprised at the restrictions of this initially appealing option.</span></li> <li><span><strong>Is it cost effective?</strong> As a case study, let's examine the life insurance as an example. On a $10,000 credit card balance, at $0.80 per $100 of outstanding balance, your monthly charge would be approximately $80/month. For $80/month, a 35year old non-smoking female in good health can purchase upwards of $500,000 of Term Life Insurance. </span></li> <li><span><strong>Can you cancel the policy, and under what terms?</strong> If you do decide to take it, make sure you keep all your documentation together so cancelling it when the time comes is easy.</span></li> <li><strong><span>Are you insurable? </span></strong><span>Many balance protection policies don't require any evidence of insurability to qualify. If you have medical issues that make you a higher risk such that individual policies would either be cost-prohibitive or unavailable to you, then maybe this is just the protection you need.</span></li> </ul> <p class="MsoPlainText"><span> <br /> On the flip side, one type of credit card insurance that you may not realize you might automatically have is travel insurance. Many credit cards feature automatic flight and travel coverage if you pay for a trip using that card. In fact, before you go out and purchase travel insurance, it bears calling your credit card company to find out the specific terms of their coverage. You may find that you can save a few extra bucks by not having to go out and get extra travel coverage! </span></p> <p class="MsoPlainText"><span> </span></p> <p class="MsoPlainText"><span>As with all insurance policies, take a good hard look at what you need, what you can afford, and whether the &quot;easy option&quot; being offered to you over the phone is going to be easy in the long run. </span></p><br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/nora-dunn">Nora Dunn</a> of <a href="http://www.wisebread.com/credit-card-insurance-no-thanks">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-ways-to-pay-off-high-interest-credit-card-debt">5 Ways to Pay Off High Interest Credit Card Debt</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/everything-you-should-know-about-getting-a-credit-card-but-didn-t-have-a-clue-to-ask">Everything You Should Know About Getting a Credit Card but Didn’t Have a Clue to Ask</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/top-seven-reasons-why-i-use-my-credit-card-for-everything">Top 7 Reasons Why I Use My Credit Card for Everything</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards">The Best 0% Balance Transfer Credit Cards</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/top-5-travel-reward-credit-cards">The Best Travel Reward Credit Cards</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards accidental death balance protection insurance credit card insurance critical illness insurance disability insurance job loss protection life insurance Mon, 22 Oct 2007 22:46:28 +0000 Nora Dunn 1314 at http://www.wisebread.com Everything You Should Know About Getting a Credit Card but Didn’t Have a Clue to Ask http://www.wisebread.com/everything-you-should-know-about-getting-a-credit-card-but-didn-t-have-a-clue-to-ask <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/everything-you-should-know-about-getting-a-credit-card-but-didn-t-have-a-clue-to-ask" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/000012817265.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>It's easy to get intimidated by the mountain of fine print that comes with your credit card. So you ignore it and use your card to make purchases, get your bill, and pay the amount due. How hard can it be?</p> <p>If you pay your balances in full each month, it's not difficult to understand at all. You just got yourself a free loan every month, and if you're smart, you used a <a href="http://www.wisebread.com/top-5-travel-reward-credit-cards">credit card with travel rewards</a> that you can redeem for free airfare, or just simply <a href="http://www.wisebread.com/5-best-cash-back-credit-cards">cash back</a>. However, if you keep a balance, you'll quickly find that all that fine print actually details all the ways you incur fees and other costs for your purchases.</p> <p>If you're wondering why it seems like your credit card debt isn't going down even though you're making payments, these are all the reasons why.</p> <h2>1. Interests adds up quickly</h2> <p>Did you pay attention to the APR when you applied for the credit card? Did it offer a 0% APR for a limited time, or a range of APRs? The APR determines your monthly interest on the balance you haven't paid off. APRs can be as high as 30%. Racking up a credit card bill could mean thousands of dollars in interest alone. Even worse is that the second you leave an unpaid balance on your card, your grace period disappears. Leave even a dollar on your balance after a bill is due, and all purchases from then on get charged interest <em>the day it's posted</em>. Are you sure those shoes are worth it?</p> <h2>2. Cash advances are charged differently</h2> <p>Seems like a sweet deal -- put your credit card in an ATM and pull out some cash. But each cash advance transaction is charged a fee, usually 3% of the transaction. On top of that, cash advances sometimes have a different APR than purchases, and they are notoriously high. Finally, is you have balance on your card from purchases, usually your payments will go to pay down the balance with the lower APR, keeping your cash advance balance the same and continually accruing interest at the much higher APR rate. Don't do it!</p> <h2>3. Don't forget the annual fees</h2> <p>Did you check whether the card you signed up for has an annual fee? Yes, some credit cards charge an annual fee, and you may not notice because they might waive the fee for the first year. Or maybe you signed up for the card knowing that there's an annual fee but you figured you'd cancel next year before you were actually charged. Well we're creatures of habit, and like most subscriptions, we never bother to cancel even when we no longer use them. Before you get a credit card with an annual fee, make sure you are actually using the benefits that annual fee is paying for. Otherwise, just don't sign up!</p> <h2>4. Late payments are costly</h2> <p>Making a late payment could mean a hefty fee, usually around $30 or more. If you're the type to pay your balance in full every month, you might be surprised when you make your first late payment the barage of extra fees -- the late payment fee, the interest charge for having a balance past the grace period, and a rise in your APR (called the penalty APR). Some companies will automatically lower the APR back to its previous rate after you make a series of on time payments again, and some issuers claim they'll never raise your APR for late payments, but for the most part, credit cards can raise your APR after just one late payment.</p> <p>If you have any doubts that credit card debt is best to be avoided, hopefully this information will convince you. Check out our <a href="http://www.wisebread.com/credit-cards">credit card guide</a> for more tips on using credit wisely.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/amy-lin">Amy Lin</a> of <a href="http://www.wisebread.com/everything-you-should-know-about-getting-a-credit-card-but-didn-t-have-a-clue-to-ask">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/new-tools-for-the-unbanked">New Tools for the Unbanked</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-use-up-remaining-balances-on-prepaid-gift-cards">How to Use Up Remaining Balances on Prepaid Gift Cards</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-overdraft-protection-racket-why-banks-want-you-to-overdraw-and-how-you-can-get-your-money-back">The Overdraft Protection Racket: Why Banks Want You To Overdraw, And How You Can Get Your Money Back.</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-a-prepaid-debit-card-really-cheaper-and-better-than-a-bank-debit-card">Is a Prepaid Debit Card Really Cheaper and Better than a Bank Debit Card?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/when-should-you-pay-a-credit-card-convenience-fee">When Should You Pay a Credit Card Convenience Fee?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards consumer finance credit card insurance debit cards fees finance charges truth in lending act Fri, 22 Jun 2007 23:31:23 +0000 Amy Lin 770 at http://www.wisebread.com