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Credit Card Insurance: Is It Worth It?

With interest rates being what they are today, and some credit cards charging higher rates than the average consumer wants to pay, it doesn’t always seem that adding something else to the bill is worthwhile. At the same time, a cardholder has to look at the potential for needing the insurance. This, of course, depends on the type of insurance that the card issuer offers.

One of the things that tend to draw cardholders away from credit card insurance is the cost, which is usually a percentage of the unpaid balance at the time of the billing cycle close. It tends to put up a red flag, and the cardholder thinks it’s just another way for the card issuer to get more money. They also see another way that they will never get the balance paid, but sometimes this line of thinking is not realistic. After all, if something should happen to you, and you don’t have the money to pay even the minimum payment on your credit cards, the insurance is a way for you to preserve your good credit.

If your card issuer offers insurance for either disability or unemployment, it is in your best interest to take them up on these offers. After all, if you become ill for a long period or you lose your job, the insurance will cover the minimum payments on your credit cards until you return to work. When you think about the potential financial ruin you can face by being unable to make your credit card payments, a few extra dollars a month is a small price to pay.

Another insurance that is often offered by credit card issuers and is a good thing to have is life insurance that will pay off the bill in the event you die. It’s easy to say that once you are gone, it can’t hurt your credit, but the reality is that if you die without insurance on the bill, it becomes part of your estate and will have to be paid out of the proceeds before your family sees any of the money. You will protect your family by insuring the balance on your bill and prevent it from becoming a part of the liabilities of your estate, thus reducing the amount of cash that is available for your family.