Sneaky Credit Card Trick #10 - Beware of Disability Coverage & Card Theft Insurance

[This post is written and copyrighted by FIRE Finance (]

Beware of Scams Once we sign up for a credit card we frequently get offers to sign up for a disability insurance or purchase a card theft insurance. Often when we call our card's customer service they try to sell us these programs. Simply avoid them, they are not worth it.

What is sneaky about these offers?

The disability insurance sold by credit card companies is offered as an extra feature with our card. It's main utility is that we don't need to pay our credit card's monthly payments in case of a job loss or disability for a certain period of time. The catch is that this insurance does NOT pay our bills, it simply puts them on hold. While we are out of work, our card is frozen, and interest is not accrued on our balance. However, the total balance is still waiting for us, the minute we get back to work. Most banks can offer this feature without having to use insurance companies.

There are also some programs that dupe people into buying unnecessary credit protection in case their card is stolen and the thief runs up a big bill. This is a scam! Federal law already protects card users. Consumer liability is capped at $50. And a good thing is that most credit card companies seldom ask us to pay $50 if we promptly report our card as stolen.

Way(s) out?


Better Solution?

It's safer to get a proper disability insurance (short or long term) through our employers that will pay us a healthy living allowance if we're disabled for a certain period of time. This will help us to keep our head above water in case such a disaster strikes. Also, consider building an emergency fund for facing such unfortunate situations.


Image Source(s): iStockPhoto

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