Credit Insurance Phoenix AZ
When sorting through various files regarding credit cards, many people may happen upon information regarding credit insurance. In fact, many people may be paying for this insurance and not even realize that they have it. Not a good idea—fees can sometimes be as high as $25 to $30 a month.
What is credit insurance?
In a time when credit card debt is at an all-time high—up to $500 billion last year—many people turn to credit card insurance for a little security. Consumer Reports reveals that yearly sales of credit insurance total $6 billion.
Credit insurance is a type of coverage designed to pay off the minimum monthly payment in the event that a credit user cannot make their payments. Credit insurance is offered more and more, so if you haven’t heard of it yet, chances are that you will. It is offered by credit card companies, banks, stores, car dealers…the list goes on.
The average rate of credit insurance is around 75 cents for each $100 of loan coverage per month. This means that if you carry a monthly balance of $3000, the insurance premium would cost you around $22 each month. That may not seem like a lot, but small sums add up: $22 dollars a month costs you $264 a year.
There are several types of credit insurance:
A typical credit insurance policy offers:
The key thing to remember is what most insurance offers don’t eagerly highlight: most coverage pays only the minimum monthly payment each month.
So is credit insurance worth the fee?
A strong debate exists regarding credit insurance. Supporters of credit insurance (usually those who offer it) say that it offers great protection for some credit users. For instance, a consumer who carries a large debt and who is in poor health may definitely benefit from the advantages of credit insurance should they become too ill to work.
Critics argue that it’s a grand money maker for companies that offer the insurance, but a bad deal for consumers. They make a case that a life insurance policy would cost the consumer less and pay out more benefits. Indeed, the Consumer Credit Insurance Association notes that...
|Settling Your Credit Card Debts||
Settling Your Credit Card Debts
If you've maxed out your credit cards and are getting deeper in debt, chances are you're feeling overwhelmed. How are you ever going to pay down the debt? Now imagine hearing about a company that promises to reduce – or even erase – your debt for pennies on the dollar. Sounds like the answer to your problems, right?
The Federal Trade Commission (FTC), the nation's consumer protection agency, says slow down, and consider how you can get out of the red without spending a whole lot of green.
Debt Settlement Companies
Many different kinds of services claim to help people with debt problems. Among them are "debt settlement" companies that say they'll negotiate with your creditors to reduce the amount you owe. Some debt settlement companies claim that they can arrange for your debt to be paid off for less than the amount you owe – for anywhere from 30 to 70 percent of the balance. For example, if you owe $10,000 on a credit card, a debt settlement company may claim it can arrange for you to pay off the debt for less, say $4,000.
But there is no guarantee that debt settlement companies can persuade a credit card company to accept partial payment of a legitimate debt. Even if they can, you must put aside money for your creditors each month. Meanwhile, it may be months – or even years – before the debt settlement company negotiates with your credit card company to settle your debts. And, if you stop making your payments in the meantime, the credit card company usually adds late fees and interest to the debt each month. That can cause your original debt to double or triple.
If you decide to pay a company to negotiate your debt, do some research before you choose one. Consider other people's experiences with debt settlement companies. One way to do that is to enter the company name with the word "complaints" into an Internet search engine. Read what others have said. You are making a big decision to spend money that could go toward paying down your debt.
Debt Settlement Fees
Companies that sell debt settlement and other debt relief services by phone cannot charge or collect a fee before they settle or reduce your debt.
If you do business with a debt settlement company, you may be required to deposit money for the company's fees and potential settlements in a dedicated bank account, which will be administered by an independent third party called an account administrator. The account administrator may charge you a reasonable fee, and is responsible for transferring funds from your account to pay your creditors and the debt settlement company when settlements occur – as long as:
The debt settlement company must give you information about the program before you enroll:
Tax ConsequencesDepending on your financial condition, the money you save by using debt settlement companies can be considered taxable income. Credit card companies and others may report debt settlements to the IRS, and the agency may consider it income, unless it finds you are "insolvent." You are insolvent when your total debts are more than the fair market value of your total assets. It can be complicated to determine whether someone is insolvent. If you're not sure whether you qualify for this exception, talk to a tax professional.
Avoid doing business with any company that promises to settle your debt if the company:
Working with a debt settlement company is just one option for dealing with your debt. You also could: negotiate directly with your credit card company, work with a credit counselor, or consider bankruptcy.
For More Information
The FTC has free materials about dealing with credit card debt at ftc.gov/credit :
For more information about dealing with mortgage debt, visit ftc.gov/yourhome .
The FTC works to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint or get free information on consumer issues , visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. Watch a new video, How to File a Complaint , at ftc.gov/video to learn more. The FTC enters consumer complaints into the Consumer Sentinel Network , a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
Dates: 12/8/2013 - 12/10/2013