Credit Card Debt Protection Doesn't Pay
Many credit card companies offer debt protection, which ideally would help deflect payments when a tough financial situation comes along. But be wary of entering into one of these programs, as they may not have the payoff that one would hope.
Bank of America charges 95 cents per every $100 spent on a credit card in its debt protection program, which is supposed to go to help if you lose your job, or another bad situation occurs, according to The Associated Press. In some cases, a maximum of 18 payments can be waived.
That being said, it doesn't necessarily mean that you are completely covered, or that your money is going to benefit someone else in that situation. The news source added that a Government Accountability Office study discovered that nine of the top card issuers received $2.4 billion in debt protection plans, but paid out $518 million.
The Consumer Financial Protection Bureau will commence operations in July. The watchdog plans to make credit card company policies like debt protection more transparent and easier for the average cardholder to understand.