Update: Payment Protection Insurance

Aug 31, 2012 by

Back in June I wrote about so-called credit card protection insurance and why it’s a rip-off. (See Credit Card Protection?) The sales pitch for this product goes something like this: If one of a specified list of events happens to you, the insurance will make your minimum credit card payment or otherwise assure you don’t become delinquent on the account—for a while. Card issuers charge an exorbitant premium for the service. A March 2011 General Accountability Office report said that credit card issuers collected in 2009 $2.4 billion in fees for the product while returning to consumers only $518 million in benefits—21 cents on the premium dollar. What a great business—unless you’re the customer!

Card Issuers Abandoning Protection Insurance Products

Probably influenced by the effects of several state-sponsored consumer protection lawsuits centered on protection insurance and a $165 million settlement Capital One reached this year with the Consumer Financial Protection Bureau, this looting of consumers appears to be about over.

According to a CreditCards.com survey, “6 out of 7 top [credit card] issuers said they had permanently or temporarily stopped marketing the [payment protection insurance] products, or altered them to make them more customer-friendly.”

Here are the specifics:

status of payment protection insurance product at top 7 credit card issuers

I’m sure these extremely resourceful, creative, and profitable corporate citizens will not accept lying down the financial hit caused by abandoning or scaling back payment protection insurance. I’ll be fascinated—and will write about it here—to see what they come up with next to try to con more money out of you!

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