Credit cards are one of life’s essentials. From buying groceries to spending a week in the Bahamas, credit cards offer us financial convenience at our fingertips. Our reliance on credit cards means that we can ‘buy now - pay later’, safe in the knowledge that the salary from our jobs can be used to repay our credit cards debts…well, that’s the plan at least!

But, what happens when the plan goes wrong? Unemployment or serious illness could strike credit cards users at any time, condemning credit cards account holders to a life of worry over how they are going to pay off the debts on their credit cards while they’re unfit to work.

Fortunately, there is an escape route for credit cards customers, and it comes in the form of payment protection insurance for credit cards.

What is payment protection insurance for credit cards?

Payment protection insurance for credit cards is an insurance policy offered by credit cards companies designed to help users of credit cards pay off their credit cards debts in the event that they are unable to work because of unemployment or illness. It is offered by most credit cards companies as an ‘add-on’ credit cards product, and like all insurance schemes is sold on the strength of ‘what if’ scenarios.

How would you pay off your credit cards if you were made redundant tomorrow? What options do you have open for paying off your credit cards if you injured yourself and could not work for the next six months? The list of situations and illnesses that *could* render us incapable of meeting our credit cards repayment demands are numerous.

Payment protection for credit cards guides us through these difficult times. With the help of the credit cards companies, our credit cards repayments are guaranteed by the credit cards insurance policy. Credit cards account holders therefore don’t have to worry about their credit cards debts when they have payment protection for their credit cards.

How does payment protection for credit cards work?

Credit cards companies offer quite extensive payment protection schemes on their credit cards. A great many illnesses are covered on credit cards insurance polices, but there are limitations.

For instance, credit cards companies will not pay out to credit cards account holders with credit cards payment protection, where the credit cards account holder is suffering from common ailments like a cold or influenza. The credit cards companies definition of illness is one where the account holder is declared by a doctor to be unfit to work. Credit cards companies often stipulate a qualifying period too before they’ll pay out on the credit cards insurance policy. This is normally a period of 15 - 30 consecutive days.

Involuntary unemployment triggers pay outs from credit cards providers too. Just like on illness claims though, there are again a number of provisos that credit cards providers put in place. These normally revolve around credit cards account holders opting for voluntary unemployment - a situation where credit cards companies will not pay out. Credit cards companies may also not pay out if the employment you were in was temporary, or if you were employed for less than 16 hours per week.

Life cover of up to £35,000 comes as part and parcel of many payment insurance protection schemes on credit cards these days as well. This means that should you die the credit cards companies will pay off your credit cards debts.

How much does payment protection for credit cards cost?

Naturally, rates charged by credit cards companies for payment protection on credit cards does vary. On average, credit cards account holders should expect to pay between 70p - 90p per £100 covered on their credit cards insurance policies. Given that credit cards companies pay out the equivalent of around 15%-20% of the outstanding balance on credit cards accounts that qualify, often followed by a final payment to clear the balance on credit cards after 12 months (if applicable), it’s overall a very useful insurance policy for credit cards users to have.