To compete in a sea of credit card companies vying for consumers, many companies offer a variety of “extras perks” meant to entice you. These extras might include cash back, mileage rewards, and frequent flyer perks, among others. Some of these extras can be beneficial to the consumer, while some have received criticism for having fine print that makes them impossible to redeem (like black-out dates for redeeming airline miles).
Others, however, go beyond being merely annoying to actually harmful. Certain card-related services pushed on consumers can amount to hundreds of dollars in fees each year—money that few Americans want to pay or can afford.
Often, unsuspecting consumers don’t realize that the extras are unnecessary, have high costs, or even that they were signed up in the first place. Several lawsuits, including one against Capital One Bank, have sought to penalize companies that pressure or mislead consumers into buying extras that they don’t need or want.
When deciding to buy products from your credit card company, consider skipping the following extras, according to a recent news article:
Payment Protection
What it promises: This service provided by your card company promises to either suspend your minimum monthly payments or cancel your debt if you lose your job or become disabled.
Why it’s not worth the money: What you pay for this service is directly tied to how much you owe on that card. According to a U.S. Government Accountability Office, premiums ranged from $0.85 to $1.35 for every $100 owed last year. This means that, if you owe $5,000 (less than half of what the average American owes), you could be paying at least $42.50 to $67.50 each month. This service isn’t cheap and is often hard to collect on. If you run into any fine print that prevents you from collecting, that means that you’ve paid for coverage that you won’t receive. If you are worried about not being able to make your payments and you don’t have an emergency fund, know that your card company will often work with you.
Credit Monitoring
What it promises: This service provided by your credit card company promises to monitor your credit to spot identity theft.
Why it’s not worth the money: This extra is particularly unnecessary, as credit card companies already have a legal responsibility to protect consumers from fraud. If you’ve ever bought something while travelling or made an uncharacteristic purchase—only to receive a phone call from your credit card company confirming that you are the one making the purchase—you know that credit card companies already have systems in place that they use to detect fraud and identity theft. If you’re really worried about being held accountable for someone taking a joyride with your card, take heart: you are legally only responsible for $50 of any unauthorized purchases made on your card. And that’s only if you report the card stolen after any purchases were made; if you report the card missing before it’s used for any purchases, you aren’t liable.
Card Registration
What it promises: This service, often offered by credit card companies, will call all of your card issuers to get replacements if you lose your wallet or purse.
Why it’s not worth the money: While this service may be described to you as incredibly useful or timesaving, it’s most likely not. You can easily save yourself $50 per year (the cost of American Express’ Lost Wallet Protector service) simply by making those phone calls to get replacement cards yourself. Instead of paying for the service, write down your card information and keep it in a secure place, in case you need to call for replacements.
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