Add-Ons with Credit Cards – Should You Say “Yes”?

Add-Ons with Credit Cards – Should You Say “Yes”?

In recent years, a large number of credit card companies have been engaging in the act of cross-selling add-ons. In most instances, these are identified as “protections” that assist the credit card holder in the event of a financial hardship, such as the development of an illness, experiencing job loss, or a death in the family.

These add-ons are advertised as a means of making credit card payments in the event that the consumer is unable to make the payment themselves. Additionally, there are add-ons that are identified as “life insurance”, “identity protection”, and “credit monitoring”.

While these add-ons are considered to be beneficial in many instances, in others that may not. Due to the limitations and the potential costs of such products, it is advised that you research thoroughly before agreeing to these additional products and/or services with your credit card.

Add-On Cross-Sells

Add-ons are typically introduced to consumers when they call to activate a new credit card; however, these may also be presented to consumers when they simply call to interact with their credit card company for one reason or another. These add-ons are simply additional services that are optional.

While many do seem appealing to consumers and may prove to be beneficial, they will cost you. In most instances, these are charged in terms of a monthly fee or a membership fee that is charged annually. They may be provided by the credit card company itself, or through a third-party vendor which has been authorized by the credit card company. Many consumers feel pressured to purchase these add-ons; however, it is not necessary to agree to them. Additionally, many consumers eventually come to find that the benefits received through add-ons are not the benefits they originally thought they would receive.

This is why, before saying “yes”, you should always ensure that you read the fine print and completely understand the guidelines associated with the add-ons.

Request Written Information

Prior to agreeing to add-ons with your credit card, it is imperative that you request information – in writing. You should make it very clear to the credit card company that you are not agreeing to enroll until after reviewing the written information. Once you receive the written information, you should look at the terms of the add-ons, the benefits and/or rewards of the add-ons, as well as the costs you will incur as a result of signing up for the add-ons.

Beware of “trial period” offers.

You should review the terms of the “trial” carefully prior to opting to try the add-on. Many have found that their credit card company will start immediately charging for the add-on unless a call or a written request to cancel the add-on is made directly.

Issues with Credit Card Issuers

According to the FDIC, many credit card companies have engaged in the practice of charging consumers for add-on services and products without their consent. These individuals were charged outrageous amounts for items that did not provide benefits, as previously outlined and/or promised. In fact, the FDIC have penalized these lenders under the terms of “unfair and deceptive practices”.

Two specific companies charged under these terms include Comenity Capital Bank and Merrick Bank. Your finances are very important.

If you need assistance with deciding if a credit card add-on is right for you or how to protect your finances, contact us at one of our many Locations today

 

Resources:

https://www.fdic.gov/consumers/consumer/news/cnfall15/add-ons.html

https://www.fdic.gov/news/news/press/2015/pr15073.html

https://www.fdic.gov/news/news/press/2014/pr14080.html