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

Tuesday, June 20th, 2023

A student loan refinancing typically involves taking out a new loan to pay off your existing debt. Refinancing student loans can potentially lower your interest rate, fees, or/and allow you to get better repayment terms, helping you save money. However, it is important to consider whether your loan is private or federal and what benefits […]

Saturday, December 26th, 2020

2020 has definitely been a very unusual and challenging year. Many of us have been waiting for its end more than ever. And now, when there is less than a week left until the beginning of the new year, it’s time to sum up the outgoing one and find out the results of the annual […]

Friday, September 11th, 2020

Walmart is finally ready to introduce a new subscription service offering free same-day delivery and fuel discount. Walmart+ was supposed to go live back in July, however, it was delayed due to the COVID-19 outbreak. Now the launch is planned to take place on September 15. The new product will help you order any goods […]

Thursday, August 27th, 2020

This month, American Express introduced its new tool called MyCredit Guide. The Amex website says: “We believe everyone should know their credit score and have the tools to understand it better.” That’s why the new feature was developed. Using the tool, you can find out your credit score and take a look at your credit report, […]

Saturday, March 7th, 2020

A virtual credit card is a unique credit card number that is linked to your main credit card account but is different from the physical card number. The virtual credit card number allows to shop online or over the phone without using your physical credit card. The numbers can usually be used once and expire if not used. The cardholders can also delete the numbers if they want or need to.

Best Credit Offer
Surge® Platinum Mastercard®
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 Group One Freedom Card
Copyright © 2001-2024 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.

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.