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Credit card insurance: don't believe the hype

At first glance, a credit card insurance policy sounds like a great deal: For mere pennies on every $100 of debt, your credit card bills will be paid even if you don't have the money. Sounds like a bargain, right?

As with everything in life, however, if it sounds too good to be true, it probably is. Though many cardholders believe a policy will pay off the card completely, the reality is that most plans only cover the minimum payments. And even if you have the insurance, the company may make it difficult for you to collect.

Credit card protection insurance: What you need to know

Your credit card company may offer it under a variety of names.  Credit card protection insurance.  Credit Shield.  Payment protection.  Credit safeguard.  But no matter what name it goes by, this insurance aims to provide the cardholder with the same thing: security in case unemployment, injury, disability, or death makes paying your monthly credit card bills impossible.  By paying a monthly fee (which vary between issuers), if you should lose your job or become incapacitated, your credit card payments are put on hold and interest is suspended, often for as much as two years.  This can help keep your credit rating intact during a rough patch, enabling you to remain in good standing with creditors.

But is paying for such a service worthwhile?