Protection from whom, exactly?
January 25, 2010 4:26 PM   Subscribe

Is the payment protection plan on my credit card something worth keeping, or is it just an unnecessary $30-40 a month?

When I got my first credit card a little over five years ago (a Capital One Visa), I was offered a payment protection plan when I called to activate the card. It seemed reasonable, so I went ahead and signed up for it. I did the same with my Discover Card, which I got during the summer of 2007. I then did what a typically irresponsible young adult does--I ran up a balance and didn't pay it off in full every month.

That was then and this is now, though, and I am determined to get both those cards paid off this year, so I've been looking for areas where I can curb my expenses. One area (well, two, I guess) that immediately comes to mind are the payment protection plan charges I get hit with every month; while $40 a month (combined charges on both cards) isn't really a lot, it's $40 a month, and eliminating those charges would make my monthly payments go a little further. So what say you, hive mind--is there any reason to keep these, or is it safe to go ahead and cancel?

Note: I have a steady job, albeit one that doesn't pay as much as I wish it did, and I always make more than the minimum payments every month.
posted by andrewcilento to Work & Money (13 answers total)
It's a scam by the credit card companies to get recurring revenue from you. Dump it.
posted by dfriedman at 4:28 PM on January 25, 2010 [2 favorites]

Absolutely not worth the money.
posted by misha at 4:32 PM on January 25, 2010

The payment protection plans are a terrible deal - if you lose your job or get disabled, they generally make your minimum monthly payment for up to a year or so. If you saved the $40/month yourself, I bet it wouldn't take you very long to accumulate 12 months worth of minimum payments, minimum payments being what they are. Dump it.
posted by pocams at 4:33 PM on January 25, 2010

Whoah, yes, definitely get rid of it if you're responsible enough to use a card, well, responsibly.

I disagree with the thought that a $40/mo charge "isn't really a lot." That's nearly $500 a year! Money much better (not)spent in your pocket!
posted by carlh at 4:33 PM on January 25, 2010

Quickest consensus ever? Quickest consensus ever. Definitely doing this first thing in the morning.
posted by andrewcilento at 4:35 PM on January 25, 2010 [2 favorites]

Just to give you a heads up, when you do call to cancel the protection plan, they are going to pull out all the tricks to convince you to keep it. Just firmly stand your ground.
posted by MaryDellamorte at 4:51 PM on January 25, 2010 [3 favorites]

Totally worthless. Get rid of it.
posted by jeffamaphone at 4:57 PM on January 25, 2010

Reiterating MaryDellamorte's point: They will jump straight into retention mode and push VERY VERY HARD to keep this going for you, to the point that they will offer it for free for a promotional period of x months.

Repeat the following: No thanks, please cancel the service.
Over. And Over. And Over.

They will do it in increasingly aggressive ways, too: "I'll just go ahead and turn on this promotional period here to give you the service for four months, FREE!"

You need to continue to repeat "No thanks, please cancel the service."

I just do it no matter what they say. But it will take about 3-5 times. Stand firm.
posted by disillusioned at 8:06 PM on January 25, 2010 [1 favorite]

Seconding Mary--expect to get transferred to a "retention specialist" who will try to make you continue being their cash cow. Politely explain that you don't want to hear the spiel, you've made your decision and to please just process the cancellation without any further discussion.

If they persist, say "I know you are just doing your job but I've made myself very clear. If you can't process this transaction without any further retention attempts per my request, then please transfer me to your supervisor immediately and we'll see if they can handle this simple request."

If they refuse to stop being annoying by continuing to try to sell you, you have no obligation to be polite.
posted by Elminster24 at 8:06 PM on January 25, 2010 [3 favorites]

It's a very expensive form of insurance. Put that money in your emergency fund every month, just in case. Or use it to pay off credit card debt.
posted by theora55 at 9:08 PM on January 25, 2010

How did the phone calls go?
posted by MaryDellamorte at 3:23 PM on January 26, 2010

I emailed Discover to ask how to cancel it, because I couldn't find it in the menus when I called, and they wrote back to let me know that they'd canceled it for me. Didn't get a chance to call Capital One today, so I'll deal with them tomorrow.
posted by andrewcilento at 7:05 PM on January 26, 2010

The woman I spoke to at Capital One did in fact try to offer me cheaper coverage, but I was pleasant and firm and she went ahead and canceled it with a minimum of me saying no thank you. Done and done!
posted by andrewcilento at 1:50 PM on February 5, 2010

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