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Payment Protection

If you have decided to submit a credit card application then one of the most common sections you will come across which centrally involves such a financial tool is payment protection.

Most lenders will strongly suggest that you take out payment protection and whilst there is a slight cost involved with this type of insurance, it works out to be around 6 pence per £100 which is outstanding on your credit card at any given time.

This figure will vary from company to company but I have never seen the figure to be any more than 10 pence per £100 and if such a cost meant the difference between comfort should the worst occur to trying to scrape the money together if the worst were to occur and no payment protection were in place.

Not only would this leave an outstanding debt of potentially thousands of pounds, this could also leave a permanent blemish on your credit record.

What is Payment Protection?

Payment protection is a type of insurance policy which covers against any ongoing health issues, redundancy and even death.

The cost is very minimal and proves to be a very useful tool to prevent any unexpected circumstances which can occur. It is unheard of for people to turn this down because who knows what is round the corner, situations could occur which could lead to the inability to clear the debt.

How does it work?

It most cases, payment protection will be mentioned to you once you submit a credit card application and the costs will be displayed at the time of your application.

Should the worst occur and you are signed off on long term sick or perhaps you have been made redundant then you need to make the credit card company and / or underwriters of the policy aware of the situation.

If this were to happen and a claim was made then this would mean that the underwriters would agree to pay the monthly repayments (however high or low) until your circumstances improve. Once you are able to take the responsibility of payments once more than the “debt” will be yours once more and best of all, this will not appear as a blemish on your record.

They will request that you complete an application form to submit in order to claim on payment protection, it can save a lot of time and hassle in the long run. Part of being a responsible credit card owner and before submitting a credit card application is to ensure that you are responsible for your spending and the clearing of any outstanding amounts.

How are payments deducted?

If you choose not to then you don’t have to sign up for the payment protection plan but should you decide to and with the small costs involved, I would highly recommend it.

You don’t have to worry about the payments because when it comes to clearing your monthly bill, whatever the excess will be, this will be added onto your bill. It will hardly be noticeable with the costs being a few pence per £100 outstanding.

If you have any queries or doubts about the payment protection plan then speak with the lenders about the benefits and what categories can result in a potential claim.

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