I was taking a look at my credit card, which I don't think I even touched this month, and I was trying to figure out what all the charges were.
One of them was payment protection. I thought about this. My credit card debt isn't actually terribly high. In the event of a catastrophe, in which I absolutely could pay no bills, this particular card wouldn't be my biggest challenge or worry.
Also, there would have to be something so catastrophic that neither myself nor my husband could scrape together a minimum payment. I'm sure there are plenty of scenarios.
Basically, what these kinds of plans allow is a vacation from paying on your credit card under certain circumstances: prolonged illness, disability, etc. There are also certain times -- marriage, birth of a child -- that you may defer payments for a few months. But, there are likely hoops to jump through and much paperwork involved. Furthermore, I got married and had a baby in the last year, and didn't use it or even know that I could.
While I can - because I am very creative - imagine some really sad scenarios wherein I couldn't pay this bill, and no one I love could help me pay it, I don't imagine any of them are likely enough for me to pay $15 every month.That's $180 a year. This is just literally buying time that I might never need, and time that won't serve me particularly well should disaster strike. It's not as though have this protection will wipe out your debt in the event of a disaster. You're just paying money for the privelege of owing money a little longer.
If my credit card company really wanted to protect me, they would give me a little electric shock every time I reached for that card.
I went ahead and cancelled that out.
How I did it: Cancelling this must be a popular option. There's a toll-free number right next to it on my credit card statement. When I called, there was no pressure to keep it, and honestly, the representative seemed a little bewildered that anyone has these things at all.
Savings: $15 a month.
Total recurring monthly savings so far: $160.
My problem: I keep thinking of things I can do with that $160 -- which is completely missing the point!
Have you considered putting the $160 directly into a bank account? As soon as you figure out you can save it, put it in a bank account. Or if you have outstanding debt on say, a credit card elsewhere, put that money automatically there.
ReplyDeleteThat is excellent advice, Unknown. I wish you'd signed your name.
ReplyDeleteI am still in Phase One: The Blood-letting.
In phase II, I will figure out what to do with the money saved, if it turns out there is any actual savings -- as opposed to having a functioning budget wherein everything is paid in full and on time.