Basics of Credit Card Payment Protection

Written by admin on April 28th, 2011

Credit card payment protection is a credit card feature that does not come as part of the standard packages that most credit cards offer. Some of the best credit cards do offer protection as part of the package, but most often than not, they are optional.

Credit card payment protection are called different things by each credit card company, but the basic idea behind it, as the term implies, is a special insurance policy that covers your monthly minimum payment for you in case you cannot make the payment. Obviously, there are special clauses governing events or occurrences that will make you eligible for cover. For example, not budgeting your money properly and not having enough of it to make the minimum payment by due date will not be covered by the insurance policy.

The most common cases covered by the payment protection plans of different credit cards include death, accidents, sickness, involuntary unemployment, and becoming a carer. Note that the actual extent of coverage and the figures vary for different credit cards, although the best credit cards offer payment protection plans that cover these five events.

If you are beset by any of the above, with the exception of death, a percentage of your total balance, which is usually the monthly minimum payment, will be paid for you. This means that you do not have to worry about getting penalised for non-payment or late payment. However, it is important to know that most credit have a maximum limit for coverage. Hence, if your balance is very large, the payment protection plan might not be enough to cover the required minimum monthly payment. It will definitely subtract to the amount you need to raise in order to meet the required minimum, but you will still need to raise the rest of the amount in order to avoid late fees. In case of death, the protection plan will not take care of monthly minimum payments but will cover all of the remaining balance, again up to the maximum limit of coverage.

Since payment protection plans are optional, you can always cancel the policy any time you wish. However, refund policies differ for each credit card company, so that the premium already paid out may not be refunded. The good news is that all credit cards Ireland banks offer and the payment protection plans they have are governed by insurance laws, so that in the case of disputes you can always file a complaint directly to the Financial Services Ombudsman at Dublin.

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