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September 1, 2008

Loans & Credit Cards – Traps to Avoid

Loan and credit card providers are bullying customers into buying payment protection insurance (PPI). The PPI hard sell on credit cards and other personal or unsecured loans might be even getting worse as it is rumored that staff bonuses often rest on PPI being sold.

But that wouldn’t matter, if PPI was not a complete rip-off. So, don’t allow yourself to be pressurized into buying it, unless you have seriously done your homework and are convinced it offers good value for money. If you know you might have financial trouble in the near future, you would be better off not considering a loan or a credit card as a solution to your financial problems in the first place.

PPI is designed to provide cover in case you cannot repay your loan, credit card or mortgage installments because of an accident, sickness or unemployment. Although, it is considered to be a valuable back-up, truth is that lenders are pocketing an enormous profit, as customers end up paying far more than they need when they have bought this cover.

Do I really have to say that claims get very easily rejected when someone is in indeed in financial trouble and tries to make a use of the cover? I didn’t think so. Usually, payment protection insurance covers sold simultaneously with consumer credit products are full of get-out clauses and loopholes.

ID fraud protection is also just another easy way for lenders to make money, taking advantage of the fear they spread to the audience. If they ever call you to let you know that your credit card has been lost on the way to you… get ready for an ID fraud protection sales pitch and turn it down!

2 Responses to “Loans & Credit Cards – Traps to Avoid”

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