Is Credit Card Insurance Worthwhile?
Is buying credit card insurance a wise investment? Consider this: Millions of consumers, the world over, use their credit cards on a daily basis. The vast majority of these same consumers will never have a problem with credit card fraud or identity theft. However, there will be many others who do encounter some form of theft via their credit cards.
According to the Internet Crime Complaint Center, $200 million was stolen from consumers in 2006 alone. Those are the most recent numbers available, but some would suggest that this problem has only grown as crooks become more tech savvy.
So what can average consumers do to protect their credit?
There are two main choices. One is to purchase added protection against credit card fraud through a credit card insurance policy. The other choice is to simply follow the established rules concerning fraud reporting.
Under current law, as long as a consumer reports the loss of a stolen card immediately, he or she is protected against unlawful or unauthorized charges. The rules for reporting are fairly easy to understand and they are also easy to obey. If a consumer notices an unauthorized charge on the next statement and contacts the card company, they—the consumer—will not be liable for the charges. It is important to understand that this contact with the credit card company must be within a certain time frame. The longer the consumer waits to contact the company, the less protection they have. In other words, the longer you wait to notify the card company or the bank, the more liable you are for the charges.
The other option is to purchase additional protection with a credit card insurance policy. These usually cost between ten and twenty dollars per month. Those who may be interested in having this added protection should understand that it does not prevent fraud from happening. No action is taken on your behalf until something suspicious happens to your credit. In other words, it is not a magic shield.
If suspicious activity does take place on your card, the card company will contact you or suspend the card. You will receive a new card and the company will begin a fraud investigation. In addition, the company will notify the credit reporting agencies that you were the victim of fraud and have your reports adjusted accordingly. The fraudulent charges will be reversed.
The bottom line is that consumers will have to make their own decisions as to the worth of this added protection. While this protection can be helpful and can make consumers feel more secure, these policies may not be as useful to some as they are to others. Many consumers may feel that ten dollars or so a month is a small price to pay for this added protection and added convenience while others may not.
If consumers are careful to check monthly statements and will report unauthorized charges immediately to credit card companies or banks, they will usually be satisfied with the results.