- The basic idea behind credit card job loss protection is that it makes your minimum credit card payment for you if you are let go from your job. The job loss must be involuntary for you to take advantage of this program. You have to pay a monthly premium that is equal to a certain percentage of your balance. The cost is generally quoted as a certain number of cents per $100 of credit card balance. Then if you lose your job, you do not have to make your minimum payment for a certain number of months.
- One of the problems with this type of plan is that it comes with a high cost. It may seem small initially, when the credit card company quotes the cost to you. For example, you may have to pay $1 per every $100 in credit card balance you have. If you have a credit card balance of $10,000, that is an extra $100 per month that you have to pay to the credit card company. These costs can add up extremely fast.
- In some cases, you can anticipate losing your job in the near future. For example, if your employer is struggling and has been laying off employees, you might consider getting this type of job loss protection. This way, you would only have to pay the premium a few times before you lose your job. In this case, make sure that you read the terms as some programs have a waiting period before you can start to receive benefits.
- Although this type of insurance might sound attractive, it is not always in your best interest. If you lose your job, it does not actually get rid of any of the debt for you. It simply makes your minimum payment for a few months. The minimum payment is usually a very small amount when compared with the total amount of money that you owe. If you have any savings built up, you could probably make the minimum payment without much problem until you get a new job.
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