Business and Finance Times

Everyone works hard to earn their living. After the hard day’s work, we all sit down at the dinner table, looking forward to a nice and delicious meal with our loved ones and suddenly something inevitable happens.. The phone rings.

Who’s on the other side of the phone? It’s one of your credit card company and they want to discuss something urgent with you right away. You feel nervous, your heart beats faster and you run through the fear of an identity theft or unauthorized charges on your credit card. Your mood is spoilt and the dinner is gone wasted.

There are numerous credit protection plans for the average consumers. It comes in variety of ranges and with flexible terms. These are basically a form of insurance packaged and promoted with the terms that your credit scores and pocket will be safe if some kind of unexpected things happen.

Every credit protection plan is different. They are mostly offered on credit card accounts and small consumer loans that are not attached to any collateral. These plans give you the reassurance that if certain unexpected things happen in your life, the company will make your minimum monthly payments. Say for example, if you run through a job loss, or a divorce or have an accident which leaves you disabled, you will get some kind of benefits as a help in your time of need.

It sounds pretty good to hear but here’s the kicker. These companies will rarely do when its time to and what they have committed in the beginning. Instead, there are a number of loopholes on these credit protection plans on which you have been regularly making monthly payments. It can be more painful than paying a corporate income tax bill.

I have seen few companies who actually advertise their products in a legitimate way and work according to the terms mentioned in the contract. That’s why I happen to be more curious when I draw some kind of comparison.

You can be smart with your money if you are able to analyze potential expenditures and make best use of available resources.

The credit card protection plans often turn out to be expensive, most of them will cost you around $.79 – $.89 per month for every $100 of your balance. This is where the catch falls because most people think that if they pay off the credit card every month, it will show a zero balance. But the fact is that the charges are still adding up and that remains hidden.

Your credit card bill shows a balance the moment you use your card once a month and the credit protection plan fee is charged before any payments are credited to your account. That’s the way for the credit card companies to run their business by putting charges on the consumers. If you intend to buy a plasma TV that costs you $5,000 and you intend to pay it in full within the due date, you will still be charged for the credit protection plan fee. At $.89 per $100 of your balance, that would come out to $44.50. This is a calculation on just one transaction. You may be doing few more transaction during the month and you intend to pay it in full within the due date. The credit protection fee will add up on every transaction done and you are planning on paying this card off when you get your statement.