I applaud this campaign from the consumer watchdog - people need warning about this product. Ninety five per cent of premiums are taken in commission by providers, very few claims are ever paid and it will not provide a financial safety net for those with mounting debts.
Braintree, Essex (PRWEB) September 12, 2008
News from Which? magazine that over 9.8million people with credit cards are forking out £127 each for worthless Payment Protection Insurance (PPI) is shocking and another blow to ethical providers who are trying to salvage the reputation of an industry rife with malpractice and greed, says PPI sector lobbyist Sara-Ann Burgess from Burgesses.
Which? reports today that almost 1.3million people buy credit card PPI in the belief it will improve their chances of being approved for credit and it appears providers positively encourage this view; three in ten consumers were told upon application that 'PPI is a good idea'.
However, Sara-Ann echoes the sentiments of Which? and says this cover is unnecessary and rips off consumers: "I applaud this campaign from the consumer watchdog - people need warning about this product. Ninety five per cent of premiums are taken in commission by providers, very few claims are ever paid and it will not provide a financial safety net for those with mounting debts."
She continues: "Credit card PPI only pays the outstanding minimum monthly balance leaving an outstanding debt which will still have to be paid once the 12 month payment period expires.
Consumers are better off reducing their level of debt rather than spending their money on insurance that will not pay out when it's needed. If the policy does pay out - and only 11% are ever successfully claimed - it will have little impact on the overall amount owed on the credit card."
Credit card PPI is worth over £970 million a year to the PPI sector, making it the second biggest selling product. Sara-Ann concludes: "It's no surprise to find credit card providers pushing this product, they make a tidy profit! If you're adamant you want this type of cover, buy a policy from one of the independent providers. Prices start at around £6 - a twentieth of the costs charged by credit card companies. Alternatively, opt for income protection - it pays all the monthly bills, not just credit cards, should accident, sickness or unemployment occur.
"During these difficult economic times, it saddens me to find consumers are falling victim to unscrupulous profit-driven companies who although profess to caring about the financial well being of their customers, are keen to encourage them to push themselves further into debt. Don't waste money on premiums, use it to line your pockets instead."