What Protection Do Credit Cards Offer?
What Protection Do Credit Cards Offer?
What Protection Do Credit Cards Offer?
Credit cards are the safe way to make payments and manage debt, but what kind of protection do consumers have against credit card fraud, or if they're unable to repay their debt?
Provided you use your credit card sensibly, it is one of the safest ways to make payments and manage your debt. Of course, each credit card holder has a responsibility to take reasonable steps to prevent fraud and unpaid debt, but that doesn't mean you don't have protection against events outside of your control.
Protection from credit card fraud
Always check the terms and conditions of any banking service carefully. Your bank will provide this on request, and they are usually available online.
You can be reimbursed for the illegal use of your credit card if you follow the necessary steps. If you have been a victim of credit card fraud, you must contact your bank immediately, and follow their directions. You will usually be required to sign an affidavit and may need to assist the police in any investigation.
A credit card balance or payment protection plan is a debt protection plan that can cover your debt when you are unable to pay
Most credit cards offer cardholders the additional reassurance of a credit card balance or payment protection plan. This is usually an optional insurance plan that can cover debt in the case of retrenchment, disability, serious illness or death. A debt protection plan typically provides cover for the entire outstanding amount owed (up to a certain rand value) or assistance with credit card repayments for a certain time period, (depending on which benefit a claim is against).
Choosing the right kind of cover
Plans differ both in the amount of debt that is covered and the range of circumstances covered by the plan.
Protecting your estate
Some plans only cover debt in the case of the card holder's death or permanent disability. These plans can ease the burden of immediate family members who will not have to worry about paying off the card holder's outstanding credit card payments.
Protecting against lost income
Other plans are more comprehensive, covering credit card debt when the cardholder has been retrenched or temporarily disabled. This gives peace of mind against the unexpected loss of income and the frustration of not being able to meet debt obligations for reasons beyond your control.
How much cover is enough?
Credit card protection plans usually only cover debt up to a specified amount. Optional protection plans allow consumers to choose the amount of protection they want, in return for a monthly premium.
It is useful to compare the amount of protection each plan offers, as well as the monthly premium charged when choosing the cover that is right for you.
This premium can be fairly modest, so it may not be the decisive factor when choosing a credit card. For many consumers rewards, such as air miles or cash back, can offset the cost of the credit card insurance premium. The important thing, if you decide that you want the assurance of a credit card protection plan, is to ensure that whatever card you choose provides adequate cover at an acceptable cost. This will allow you to enjoy all of the benefits of your credit card with the peace of mind that debt insurance gives.
By staying informed and choosing credit card products that are right for you, you can be assured of the optimum protection from your card and that your transactions are safe and secure.
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