Credit card insurance: is it a good idea?

Friday, September 14th, 2012
Updated: September 14th, 2012
The content is accurate at the time of publication and is subject to change.

With today’s economy, you might be incited by offers from your credit card companies to credit card protection insurance.

This product promises to pay your bill if you lose your job, become disabled, suffer an injury and can’t work, or die. If you’re already struggling with credit card debt and your job stability feels shaky, it might sound like a good idea.

But credit insurance, which is also available for other types of credit, has its fair share of critics, and many financial experts say other options, for example life insurance, are more cost-effective.

Let’s have a closer look and know why:

The price you should pay

The cost might not sound like much at first, but it adds up fast. Let’s look at the example: say one credit card company charges 82 cents per $100 of the monthly balance. Sounds cheap, right? Not if you carry a considerable balance like many cardholders do. For instance your balance averages $5,000 a month. The insurance would cost $41 a month – $492 a year. Use that extra $41 for paying down your credit card debt instead.

Limited benefits

Now let’s see at benefits you get, or maybe not, from the insurance. Generally credit card insurance pays only the minimum monthly payment while you’re out of work or temporarily disabled. You still accumulate interest charges, and unless you’re disabled or unable to find work for a very long time, the benefit won’t work in full. Also, there may be some limitations on benefits which are worth being checked out. For example the amount of insurance payments may be capped if there are promises to pay off an entire balance in case of death.

Take a magnifying glass and read the fine print – companies love writing important things in fine prints. Read if there is a waiting period for benefits. How hard will it be to collect benefits? And don’t forget that credit insurance from one credit card company doesn’t cover balances on your other credit cards.

Think of alternatives

There is no need in credit card insurance if you have a good life insurance policy. Usually a life insurance policy is enough to protect you and your family from your bills in case you die. If you don’t have life or disability insurance, then search and compare policies and prices. These can provide much broader coverage than credit insurance.

Credit card insurance might be a good idea if you have high credit card balances, little savings and no other insurance. However, most experts are unison in opinion that it is better to find other ways to get protected.

All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.

Latest Other Card News

Wednesday, September 19th, 2018
Credit scores and credit reports have become an integrate part of our lives and financial health. There are a lot of services that allow to check credit reports online and ...
Tuesday, February 6th, 2018
If your wallet is bulging with store loyalty cards, there’s good news for you from Samsung Pay. The most widely accepted mobile digital wallet system in the United States is now ...
Friday, September 1st, 2017
Identity theft and banking fraud concern more and more Americans, according to a recent FICO survey. And that is not a surprise as credit card fraud continues to grow, especially ...
Tuesday, April 12th, 2016
Springtime is the season for house hunting, but many people planning to move this year say they’ll rent, not buy, their new digs.
Tuesday, January 5th, 2016
Online banking has revolutionized the way people do business with their banks, and one result is that fewer and fewer folks are actually stopping in to branches to do things like ...
Best Credit Offer
Horizon Gold
Check off the cards you want to compare. Then click the Compare link to go to the comparison table.
Consumer Rating: 4 / 5
Horizon Card Services Horizon Gold Credit Card
Copyright © 2001-2018 All Rights Reserved.

*See the credit card's terms and conditions on the online application page. Note that this website may be compensated by credit card issuers when the visitor applies for a card through the links on this website. We do our best to maintain all information accurate and up to date. However, we do not warrant the credit card information won't change. Click the "Apply Online" button and review the current info on the secure credit card terms page.

Information in these articles is brought to you by Banks, issuers, and credit card companies mentioned in the articles do not endorse or guarantee, and are not responsible for, the contents of the articles.

The webpage is a free service and an information resource for credit cards and financial products and services available to eligible United States consumers. does not offer any warranties and is not a direct service. There are no guarantees for approval or offers when applying for a credit card. Please refer to the application if you would like more information on each credit card. When you click "Apply" for a particular credit card, please take the time to review the terms and conditions of the product/service at the issuer's website. All logos on the website are property of their respective owners.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer. Opinions expressed here are the author's alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. Reasonable efforts are made to present accurate info, however all info is presented without warranty. Consult a card's issuing bank for terms & conditions. makes every effort to keep information up to date and accurate. However, the information regularly changes and is presented without warranty. Therefore, we strongly recommend all our readers to visit the credit card application page by clicking "Apply Online!" button to review the detailed credit card's terms and conditions. Note that may be compensated by the credit card issuers when the readers apply for a credit card through this site. is an independent, advertising-supported website which receives compensation from the credit card issuers and companies whose offers appear on the site. Compensation may impact how and where products appear on our site, including, for example, the order in which they may appear on the site pages. does not review or list all available financial or credit offers.

Disclosure: Not an access card.

You've successfully subscribed!

Please specify the following:All these fields are optional

Thank you for providing this information! We will make sure our letters are useful for You.

User Generated Content Disclaimer: These responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.