CREDIT CARD INSURANCE RIPOFF

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CREDIT CARD INSURANCE

Everyone with a credit card gets a call, a letter, a reminder on their statement and now, probably an email message. The credit card company that issued you the card wants you to purchase credit card insurance. They make it clear what the advantages are, and tell you they can sign you up if you give them the go-ahead.
Without thinking it out, you'd say, "60 cents per $100.00, that's a steal. I'll take it." But if you think a little, you'd say, "60 cents per $100.00 on the remaining balance each and every month? No way, that's a big time ripoff."
Credit card insurance is a good idea, but not at those steep rates. Let's go through some of the numbers.
Let's say your balance is $2000.00. A lot of people pay 18% to 24% APR. I'll give the credit card companies a break and charge only 15%. I'll also give the credit card companies a second break and calculate simple interest instead of the more expensive calculation of compounded daily interest. And, I'll give the credit card companies a third break by paying a steady monthly amount of $50.00 (Most people only pay the minimum amount due). What all of these breaks mean is that you, the cardholder, will actually get less for your money than the following figures show. [I am also going to round off numbers, but that will balance itself out.]
Taking all of that into account, here is what we have:

MONTH	BALANCE	INS FEE	INT FEE	PAYT	NEWBAL
1	$2000	$12	$25	$50	$1987
2	1987	12	25	50	1974
3	1974	12	25	50	1961
4	1961	12	25	50	1948
5	1948	11	24	50	1933
6	1933	11	24	50	1919
7	1919	11	24	50	1905
8	1905	11	24	50	1890
9	1890	11	23	50	1874
10	1874	11	23	50	1858
11	1858	11	23	50	1842
12	1842	11	23	50	1826

After 12 months, that 60 cents per $100 will cost you $136. After making payments totalling $600, you will still have a balance of $1827.00, so your $136 in insurance will have protected you against only $173 worth of debt.
That's a mighty lot to pay for insurance that only covers you if you get sick for an extended period of time or lose your job (What if you got sick for a week or had to quit your job? Would you be covered? I doubt it.). And, at the slow rate the balance is decreasing, payments could go on for 9 or 10 years and cost you around $900. $900 is a lot of money to pay for insurance on $2000, don't you think? (Don't forget! I gave the companies several breaks in making these computations.)
Al Capone would have loved to get a piece of some action like that.
If the truth be told, the annual fees plus the excessive APRs credit card companies charge should automatically include insurance coverage. In the absence of that, credit card insurance should only cost a flat, one time fee of $25 or $30 per year. But companies are not going to settle for that when they can use the government's laws and your fear to rip you off to the tune of $140 or so each year.
It is because of ripoffs like this that so many individuals have filed for bankruptcy. It's a crime to rip people off that way, but some crimes are legal. That, Brothers and Sisters, is the white American way.

The chart above supposed 60 cents per $100 was the insurance fee. Since then I have received an offer of 96 cents per $100, which amounts to a 60% greater ripoff. In the information above, I have been very generous to the credit card companies. Additionally, in most cases, the same company that provides you with the credit card wants to provide you with the credit card insurance. It's as simple as pie; credit card companies don't want to take on the risk associated with running their own businesses, so they put the burden on you, the consumer. That is unfair and lacking in morality, but that is the American way.

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