OVER-burdened borrowers taking advantage of the New Year’s credit card switching deals should stop short of signing up for their new lender’s expensive payment protection insurance (PPI) if they are to successfully manage their debts, warns independent PPI provider Paymentcare.co.uk.
“January is traditionally the time for lenders to woo customers with attractive 0% interest switching offers and whilst these deals can be a great help to millions of consumers, they won’t deliver the full benefit of a zero interest rate if accompanied by hugely expensive PPI,” said Paymentcare.co.uk managing director Shane Craig.
“With millions of people in the UK suffering the effects of a groaning debt mountain, it’s crucial that they protect their ability to maintain their repayments,” he added. “But paying through the nose for their lender’s expensive policy is not the best way to do it.”
Many consumers still believe that they are obliged to take their card provider’s cover – or go without – but at just 65p per £100 of outstanding balance, Paymentcare.co.uk offers one of the most competitive rates for credit card protection in the UK.
Crucially, Paymentcare.co.uk customers will receive a monthly benefit of 10% of their chosen cover limit in the event of a claim, this means for a chosen cover limit of £1,000, the monthly premium is just £6.50 and pays the customer a monthly benefit of £100.
Consumers comparing Paymentcare.co.uk’s prices with credit card providers’ own offerings can clearly see the savings that can be made*.A like for like policy with Egg costs £7.50 per month and with Barclaycard £7.90. But not all card providers pay the same percentage of outstanding balance with the worst offenders offering a paltry three per cent, and that’s the real sting in the tail!
What this means for the unsuspecting card holder is that they’re actually paying a small fortune to receive £100 of benefit from their card providers’ payment protection insurance all because of the way the cost is expressed as a rate per £100 of outstanding balance, see the table below*.
Cost per £100 of outstanding balance
% of balance covered
Cost per £100 of monthly benefit being paid
Total additional payment with PPI
Paymentcare.co.uk 65p 10% £6.50 £100 Egg 75p 10% £7.50 £100 Barclaycard 79p 10% £7.90 £100 Virgin 72p 3% £24.00 £30 Morgan Stanley 76p 3% £25.33 £30 Goldfish 78p 3% £26.00 £30
* Research by Paymentcare.co.uk - December 2006
Paymentcare.co.uk offers an LASU policy (Life, Accident, Sickness and Unemployment) to protect monthly repayments on card balances in the event of the card holder being unable to make payments because of their inability to work.
As well as being significantly cheaper than lenders’ own policies, Paymentcare.co.uk offers flexibility, allowing borrowers to cover outstanding balances on as many credit cards as they wish, from £1,000 to £5,000.
“It’s simple and transparent, like all Paymentcare.co.uk policies,” said Craig. “The policyholder selects the level of cover that’s closest to their average monthly outstanding balance.”
“And, unlike the credit card providers, there are no premiums to pay while the cardholder is in claim. It’s an all-round win situation for consumers.”