3-On Your Side: Credit Protection Plans
PHILADELPHIA (CBS) -- Have you ever seen those protection plans offered by credit card companies that promise to help with bills when you're faced with illness or unemployment? Sounds like a great safety net right? Well, 3 On Your Side's Jim Donovan finds they don't always provide you with the security you need.
Cheryl Gaffner hopes for the best but plans for the worst.
"I just know with my luck that something catastrophic may happen," said Gaffner.
So, two years ago, when Gaffner financed some plastic surgery with this credit card, called Care Credit, she decided to get some protection.
She enrolled in Care Credit's account security program.
"I wanted to be proactive about it," said Gaffner.
The deal, Gaffner pays an extra $125 a month and Care Credit cancels her outstanding balance if she loses her job, or so she thought. When Gaffner did get pink slipped, Care Credit refused to cancel her debt.
"They managed to find some loophole that I was not unemployed enough," said Gaffner.
"There's always, a catch I would say on these things," said Jacob Gibson with financial website, NerdWallet.com.
Gibson says financial protection plans rarely pay off for consumers.
"You have to be very careful to read the terms and conditions because they will go out of their way to make sure they keep your money," said Gibson.
For example, Care Credit requires customers to be involuntarily unemployed for more than 90 days, along with eight other caveats.
And then there's the cost of these protection plans. It's based on your account balance. So depending on the card, those fees are like paying an extra 8 to 18 percent interest each year.
Gaffner calculates, all told, she paid $1,700 dollars for her protection plan. A plan that didn't pay off when she needed it.
"I just feel like I've been taken advantage of," said Gaffner.
When contacted for comment, GE capital, the company that owns the Care Credit program, ended up refunding Gaffner the $1,700 she paid, but still has not responded to questions about the protection plan.
Reported by Jim Donovan, CBS 3
