francisB
New member
Everyone who has or is likely to open a credit card account sometime in the future may get provided payment protection. On the face, it seems like a good idea, but actually, it's a shell game that's really dangerous for one's wallet.
First ever CFPB fine
The first fine ever passed down by the Consumer Financial Protection Bureau was recently slapped on Capital One, the credit card-issuing bank that has those funny commercials with Vikings. The fine was part of a joint action with the Office of the Comptroller of the Currency, according to USA Today, directing Capital One to pay $150 million to customers and more than fifty million dollars in fines.
There are third party vendors that offer products such as payment protection programs and credit monitoring with charge cards from Capital One. Capital One’s customers lost a lot of money to these services since the 3rd party vendors did not ever disclose fees and would lie about the services provided.
Time magazine points out that Capital One is certainly not alone in sacrificing payment protection from the services offered with a charge card. A ton of banks are dropping these kinds of programs.
Many people see Nothing more than a cash advance to the bank
People are always cautioned against getting any sort of payment plan because they do not help enough to be worth it, and they almost never actually pay out. They are just like any type of insurance where it takes a lot to actually get the cash out. A company will “cancel” some debt with the payment protection if you get injured or lose your job to be able to help you out for a little bit. This generally consists of making minimum payments for a few months. They are not worthwhile though.
The payment protection plan generally costs 1 percent of the balance, according to Time, which is about 85 cents to $1.35 of every $100 owed, according to the Government Accountability Office survey. That can add up a ton of months if the minimum payment is only made. Insurance corporations do not want to pay out cash instead of collecting it.
It is almost impossible to actually get a payout though due to the terms around the payment.
Providers no longer offering it
The insurance is easy cash for the banking industry, which earned $2.4 billion in 2009 from it, according to Government Accountability Office estimates.
There are not many financial advisers that would advise an individual to get payment protection insurance. Articles on Daily Finance from 2008 and Bankrate from 2010 both caution people to stay away.
Chase bank, and Bank of America are all following Capital one in sacrificing the product and suppliers of it, according to Time. Chase, Discover, Capital One, Bank of America and HSBC have all faced and settled suits over payment protection programs in recent year, according to Fox Business. This is one main reason banks are sacrificing it.
Sources
Time
Fox Business
USA Today
First ever CFPB fine
The first fine ever passed down by the Consumer Financial Protection Bureau was recently slapped on Capital One, the credit card-issuing bank that has those funny commercials with Vikings. The fine was part of a joint action with the Office of the Comptroller of the Currency, according to USA Today, directing Capital One to pay $150 million to customers and more than fifty million dollars in fines.
There are third party vendors that offer products such as payment protection programs and credit monitoring with charge cards from Capital One. Capital One’s customers lost a lot of money to these services since the 3rd party vendors did not ever disclose fees and would lie about the services provided.
Time magazine points out that Capital One is certainly not alone in sacrificing payment protection from the services offered with a charge card. A ton of banks are dropping these kinds of programs.
Many people see Nothing more than a cash advance to the bank
People are always cautioned against getting any sort of payment plan because they do not help enough to be worth it, and they almost never actually pay out. They are just like any type of insurance where it takes a lot to actually get the cash out. A company will “cancel” some debt with the payment protection if you get injured or lose your job to be able to help you out for a little bit. This generally consists of making minimum payments for a few months. They are not worthwhile though.
The payment protection plan generally costs 1 percent of the balance, according to Time, which is about 85 cents to $1.35 of every $100 owed, according to the Government Accountability Office survey. That can add up a ton of months if the minimum payment is only made. Insurance corporations do not want to pay out cash instead of collecting it.
It is almost impossible to actually get a payout though due to the terms around the payment.
Providers no longer offering it
The insurance is easy cash for the banking industry, which earned $2.4 billion in 2009 from it, according to Government Accountability Office estimates.
There are not many financial advisers that would advise an individual to get payment protection insurance. Articles on Daily Finance from 2008 and Bankrate from 2010 both caution people to stay away.
Chase bank, and Bank of America are all following Capital one in sacrificing the product and suppliers of it, according to Time. Chase, Discover, Capital One, Bank of America and HSBC have all faced and settled suits over payment protection programs in recent year, according to Fox Business. This is one main reason banks are sacrificing it.
Sources
Time
Fox Business
USA Today