While one may feel it is a victory for consumers that the Consumer Protection Financial Bureau has recently levied close to a billion dollars in fines against the credit card companies credit card protection insurance programs, it is really just a first step.
Obscenely over-priced Credit Card Protection Insurance was used as a hedge by the credit card companies against their own customers. The result was those customers had no way legitimate way to pay for debt suspension insurance in the event they had a dire circumstance arise that precluded them from making their monthly credit card payments.
Banks got a bailout, shouldn't consumers get a debt time out if they have a legitimate reason they have to either reduce or stop their payments for a while?
If an credit card protection insurance policy covered debt suspension, that would be a fair option.
But what if that debt suspension insurance policy, instead of charging 2 to 4 cents per 100 dollars per month, was actually an unregulated debt suspension insurance policy charging 99 cents per 100 dollars per month?
Consumers would end up buying 5 years worth of coverage in about 3 months time, but only getting 3 months worth of coverage!
Consumers would end up buying 5 years worth of coverage in about 3 months time, but only getting 3 months worth of coverage!
A 10,000 dollar credit card debt, if covered by credit card protection insurance, in just seven years time would result in the ENTIRE credit card debt being nothing more than credit card credit protection insurance premium charges, and the interest rate charged on top of each premium charge!
I believe that 90% of all credit card defaults should be unwound since credit card companies prevented their own customers from using a sound insurance concept to simply suspend their debts when an emergency arose.
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