-You pay X%.. let’s say 1% of your end of month balance.
It varies from policy to policy and sometimes you only pay if you don’t make the full payment on time, etc. It’s tempting for a few reasons:
-they generally insist a fair bit in the hope that the easier way out will be for you to say yes
-they will often offer it for free for a few months and assume that you probably will not bother to cancel
-it makes sense to think that it could be useful at some point and that since you plan on having no balance, the cost will be minimal
Here’s The Thing Though
This is a very high margin upsell for credit card companies. They are able to make decent amounts with little to no liability. Do you wonder why they don’t even bother asking you questions about your health, your job, etc. Why? Because they’re making so much that no matter who says yes, they’ll likely still be making a profit.
It’s An Easy Way Out
For most of us, calling an insurance company is complicated and something that we delay as much as possible. But the worst possible way to deal with that problem is going ahead and signing up for a bad insurance policy just because it’s convenient…!