Many credit card companies offer some kind of ‘protection’ program that is supposed to protect against emergency situations (like being deathly ill, or in some kind of financial crisis) ususally by deferring/canceling your minimum payment for some stretch of time. Ordinarily, this doesn’t seem worth it to me, since obviously you pay for it- depending on the card/promotion it comes out to either 1-2 percent or some similar flat rate every month.
But I was looking at Best Buy’s card protection program for their credit card (I got it so I could get no-interest financing on a new TV). One of the qualifying factors was ‘involuntary loss of job’. I may be getting laid off this summer. Hmmm… :dubious:
I’m thinking, would it be worth it to get the protection KNOWING I might get ‘involuntarily lost my job’ so that I can carry an interest-free balance, then try to have them forgive some of the debt after I get laid off? If so, it might work out pretty favorably for me
TLDR version: Trying to take advantage of the card protection program Best Buy offers to end up getting a fat discount on a television. But will it work?
One way to look at this is to ask if they make a profit on it. My rule is to get insurance only against losses I cannot bear since the insurance companies certainly make money. I even wonder if I should get collision insurance on my two year old car. I’ve had it most of my adult life and never made a claim. Since I paid cash for the car, I can obviously bear even a total loss.
These are a huge profit maker for creditors. I attended an academic presentation by some PR guy from the Federal Reserve (as fun as it sounds & more!) about these, and they are generally sold hard to a lot of people who don’t need them.
I’m not sure they would be likely to forgive any of the balance. The benefit would usually be in not having a payment due while you were laid off. Read the fine print.
The only time it *might *make sense to get a plan is the situation you are in, where you have knowledge about your potential for a layoff that the insurer doesn’t have. In insurance-speak that’s “adverse selection.” Also read the fine print about whether the level of knowledge you have about the upcoming layoff would invalidate the coverage, like a pre-existing condition.
Instead of buying the protection (which really protects the credit card companies, not you) why not pay off the credit card as quickly as you can and build up an emergency fund in your savings account?
We keep collision on our newer (under 5 years) cars but have a high deductible ($750?)
We don’t do credit card protection. They only pay the minimum balance and I’m not even sure if it forgives interest. Instead, put the money you save ($15.00 a month or whatever) into your own protection program.
So, to summarize, you think you may be getting laid off this summer and your insurance policy against this is to apply for credit to buy a TV you don’t need, can’t afford, and are willing to pay a premium for each month to ensure it doesn’t get repoed when you run out of money?
If you think you’re likely to lose your job, putting more money on a credit card at Best Buy is probably the exact opposite of what you should be doing.
I can already afford the TV. I’m trying to finagle a way to buy it with an interest-free loan I can pay off over 18 months with no minimum payment, maximizing the cash I have on hand.
I’m trying to take advantage of my potential status as unemployed to get a discount.
