Credit Cards May Help With 'Life Events'

The two banks, along with some others, are more than happy to help defray some of the cost of your wedding, having a baby, moving, retiring, losing your job, or even a nasty divorce.

Yep, this is your chance to take advantage of one of these banks, just as they did when you were one hour late in making a credit card payment.Now before you ask my editors when they last had me take a drug test, what I am telling you is absolutely true.

But, before you even think about picking up the phone and signing up, you MUST DO EVERYTHING I TELL YOU. Banks and credit card companies that offer debt cancellation or debt deferment plans will make tons of money off you if you fail to dot one "i."

Now, once in a while I like to play with fire. If you don't have the stomach for it, just enjoy reading this column without taking any action. Live vicariously.

And before taking action, there are two musts. First you need to have, and be VERY familiar, with online banking to keep instantaneous track of your account and be able to make immediate payments. Second, you must READ EVERY WORD in the credit card company's offer. Yes, that includes all the fine print.

So far, these plans have pretty much flown under the public radar. They were originally geared mostly to provide a sort of insurance in case of death, disability, identity theft, and involuntary loss of your job.

My focus is on the more recent features. Neither Consumer Reports editor Charles Fields, nor Justin McHenry, research director of IndexCredit Cards.com, had heard of the "life event" features.

They both cautioned consumers not to take these plans for death and disability benefits because the cost tends to outweigh the benefit. And McHenry, while intrigued with my experience, warned that it's not for average consumers who aren't willing to keep close track of their finances.

To explain how it works, I will tell you my experience. About two weeks before my October wedding, while checking on the status of my Bank of America credit card, the service representative suggested I enroll in its Credit Protection Plus plan.

I asked why I should be interested, as I already have life insurance. She said the plan has many other features, including paying benefits if I get married. Those were the magic words.

So let me get this straight, I said. If I enroll in this plan tonight, and I get married in the next two weeks, Bank of America will make three of my minimum payments on my credit card? And all it costs me is a one-time fee of 95 cents for each $100 of my balance? Yes, she replied.

And, I asked, I can then cancel and not have to pay another fee. Yes, she replied. The fee, if I don't cancel, would then be tacked onto my bill each month, increasing my balance.

Since I was carrying a high-balance, low-interest introductory loan (the maximum the policy covers is $25,000), I quickly calculated that the bank would be paying me about $500 a month in return for less than $250 from me.

I told her to sign me up. I then checked with Chase, where I also have a sizable low-interest credit card loan (did I mention I like to play with fire?), and was told they have a similar, but less generous plan. Chase would waive up to five months of minimum payments, saving me substantial interest, in return for my taking out its plan at 89 cents per $100. Sign me up, I said.

After our wedding, I immediately notified both banks that I wanted to trigger the benefits. They both promised to send me a packet and told me I would have to get proof of marriage.

I mailed the applications and marriage certificates to both banks and waited, while my stomach turned a little as I wondered if I had done something stupid. It would not be the first time.

I consoled myself knowing I would at least get a column out of the experience. I had some doubts, though, that the bean counters in our Chicago headquarters would approve my expenses if I included the payments I had made to purchase the plans.

The first things to appear on my online bank statements were, of course, the charges from the two plans.

source:http://www.courant.com/business/hc-watchdog0127.artjan27,0,2336411.column