Credit protection, payment protection, call it what you want, almost every credit card issuer has such service. These service basically lets you defer payment to your credit card in the case of an emergency or a “life event” in which cash flow may be strapped.

Stay away from them! Paying $0.50 for every $100 in balance for some hard-to-claim “insurance” is ridiculous!

Avoid those $15, $20 enrollment bonus checks like the plague! Even if you have no balance, don’t sign up! It is NOT worth the hassle.

So according to my sources, which is basically two people (and me), Chase’s Payment Protection is beyond crap. Last year when I called Chase to activate my new Bank One card, instead of receiving an automated activation from the phone system, I was greeted with a live operator. What the?

After a few minutes of confirming my identity, the operator proceeds to ramble on about some silly service.

“Ah no thanks, I don’t need the payment protection service.”

“Are you sure?” Asked the CSR, “You’re under no obligation and this is a free 30 day trail. You will not be charge any fees since you don’t have any balance, you have nothing to loose!”

The heck. Of course I don’t have any balance, I’m trying to activate my card!

“No, I don’t need the service, so please don’t sign me up.”

See, you would think that’ll be the end of it.. but imagine my surprise when the CSR repeats his sale pitch, in a different and much longer speech, ending with a “So, can I get your approval to sign you up for this plan?”

“NO! I do NOT want this plan!”

“Okay then.” the CSR said, sounding hurt, “thank you for calling to activate your card, have a nice day!”

Right, after taking 20 minutes to activate my card?

Again, according to my imaginary sources, Chase has been pushing for their payment protection plan to the extreme level. When a friend of mine called to activate his Chase card, he was on the phone for a good 30 minutes. Eventually his guard was let down and he said “fine.” Bad move. Long story short, he was be riddled with fees for the next few months, and it took many calls and many transfer to finally get the service cancelled and to get his money back.

Services such as credit and payment protection is just targeting people’s emotion. The Chase’s Payment Protection website is a great example:

Hey, why not buy more debt?

Dedicated site to sell more debt.

With tag lines such as “When hardship strikes, defer your payment” and “Defer your payments up to two years, when you need it most.” It’s obvious they’re messing with your emotion. Don’t even get me started with the images they have on that website! What happens when you’re suddenly lay off from work? Hey, who needs emergency savings? Defer your payment!

The worse part is when people sign up for the service and try to claim the benefit for legitimate reasons; only to get denied benefit, after mounds of paperwork and headache!

The credit card industry is great at selling more debt. I’m all for responsible credit card usage, but with numerous service such as this being pushed towards consumer, I can totally understand why people should just stay away from credit cards altogether.