I am doing a balance transfer to a new credit card and would like payment protection cover?
Monday, May 31st, 2010 at
5:12 am
The bank’s credit card offers their at 79p per £100 transferred.
Is that good? Can I get independent payment protection that would cover my payments in the event of unemployment?
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That is 79p per £100 of the balance owed per month. So, if you owe £1000, it will cost you £7.90 per month. And what will that give you, assuming your claim is allowed? It will pay the minimum, which would be £20 or £30 per month, depending on the card.
I believe the government are investigating this “insurance” on the basis that, at best, it is not good value for money, and, at worst, it is a scam.
You can buy independent insurance to cover you in the event of unemployment, but, no doubt, that will be getting more expensive as the economic situation worsens.
You must assess the likelihood of you being made unemployed to make a considered judgement.
It depends on the company some independent companies offer income protection which is approx £25.00 pm – but again contrary to the previous answer, it does depend on the credit card company but payment protection pays out a percentage of your balance on the day the claim is made and because you have to wait 30 days after being made redundant before making a claim it is backdated to the first day of unemployment, and not the min payments, some companies will allow you to adjust the payment protection so it covers you just for particular things for example just unemployment or just sickness and that way they adjust the price of the cover
Also each month we received figures of the amounts that payment protection has paid out and I will just say that it can be worth it if you are made redundant we have paid out millions each year, and I worked in the collections department and I have seen and heard from people who have been made redundant refused PPC and now wish they had taken it out, because it would have helped them with their payments and stopped the bad credit history
79p is a typical price for a credit card these days.
However, it actually costs the credit card companies about 20p. A 300% profit margin!
Also bear in mind that it generally only covers the minimum payment. If your monthly interest rate is 1.5% and your minimum payment is 2.5%, it won’t repay much of the balance, also you may find the card usage is restricted; otherwise people would claim on the insurance and then build up big balances.
You should seek an independent company, they probably charge about 40p/£100. They will have other options, such as paying a fixed amount which can cover bills, mortgage etc. Some credit card companies do offer that but at a hefty premium