Recently I’ve been on a quest to cancel all of my unnecessary expenses. This week it was the balance protection on my Visa. It was one of those relics from my youth that sounded like a good idea at the time. Its never really bothered me before since I rarely used my Visa. My America Express Platinum charge card was my primary card (I know, I know I’m a fool for paying that $400 yearly fee). Now that my AMEX has been canceled the Visa balance protection has caught my eye.
For those of you who don’t know, balance protection will make your minimum payment if you become disabled because of accident or illness and you are unable to work. As well if you find yourself out of work, through no fault of your own. However this will only last up to a maximum of $10,000 or 24 months, which ever comes first. Now the silver lining is they’ll pay the entire balance should you find yourself diagnosed with a critical illness or die. All this wonderful coverage can be had for the low price of $0.89 per $100.
The biggest benefit of having a credit card is that it’s pretty much a 1 month interest-free loan. Responsible credit card users take advantage of this by paying off the balance each month and earning the rewards the card provides. However even if you pay off the balance each month you still have to pay the balance protection. On the surface the cost doesn’t seem all that bad, just a mere $0.89 per $100. If you annualized the cost it comes out to $10.68, which is nearly 11% interest. There goes our interest-free loan. The interest on this card is about 20%, add on the balance protection and now you’re up to 31%. No, No I couldn’t have any of this (especially since I’ll be carrying a balance for the next 2 months to meet my RRSP goal). Time to call the credit card issuer and cancel.
I can honestly say that credit card issuer was really concerned about my decision to cancel the balance protection. First they asked that I give it a couple of days and sleep on it. Next they started to read out five alternate plans that they offered. Then they wanted me to read over the literature of my existing plan just to make sure. Finally he re-iterated how concerned he was should I have any untimely mishaps. All in all it took me 15 minutes and a bit of frustration with the call but in the end I was left with a sense of relief to get this added expense canceled.
I’m just curious about other peoples experience with “forgotten costs” and if they were pressured to continue paying them?
-mfd-
I got my credit card along with the balance protection plan a year and a half ago. At first I didn’t want the plan but they convince me into getting it anyways. Months into the plan i realized that I don’t really need it and plus im just a student. My father was like why are you letting them charge you. So i called them a few months back and told them that i want to cancel my plan. Once they heard the word “cancel” they were like acting all concern and they kept on telling me to try it for another month. I kept on saying that i don’t need it but they just kept on saying that i do. Sadly i fell for it and eariler this month i just got so tired of paying for something that i don’t even need. I did a little research on this and find that there are other people who are facing the same issue. So this month Im just going to call them and cancel the plan no matter what they say to me. It makes me mad cause it seems like the customers are losing control over their credit card activities.
Hi Emma,
Ya they do a pretty good job in guilting you into keeping the protection. It became a lot easier to cancel once I learned what they actually covered. I was under the assumption that they would pay off the balance if I became unemployed. It was quite naive about it. I’m glad you’ve decided to take charge and cancel the “protection”. Good work