Credit card insurance - does it pay off for me?

There is no denying that a credit card is a useful financial instrument. Its advantages include quick access to additional funds without unnecessary formalities, a few dozen-day interest-free period or the possibility of creating a positive credit history. The latter will be useful especially for those who intend to apply for a loan in the nearest future.

However, like any credit, the one taken out via electronic money will have to be repaid one day, so if you want to use a credit card without worrying about it, it is good to think about insurance today. When should I decide to take out credit card insurance? What are the costs involved? What guarantees our insurance? These and other questions are answered by our experts.

Using a credit card (as well as a debit card) carries some risks that we should be aware of. We are talking not only about a situation when we are over-indebted and lose control over our expenses by incurring new obligations, but also about the theft or loss of a card, which means that our plastic can be used by someone unauthorized, and unauthorized transactions in some cases will charge our account.

A clue!

If you are afraid that with a credit card you will not be able to control your finances and at the same time you are short of money - consider non-bank loans. Although you will also have to pay them back (with interest), if you decide to pay them back from the beginning you know how much and when you will have to pay them back (you will not spend more than you have in your account).

As we have already said, this card is a credit product and, therefore, all random events such as accidents, serious illness or job losses can be associated with difficulties in settling a previous commitment. This is why banks want to protect their customers at least partially from the consequences of such events and offer credit card insurance (not free of charge, of course).

Does the law protect my credit card?

Before we decide to purchase credit card insurance, it is worth knowing that each card is subject to certain legal protection under the Payment Services Act of 19 August 2011 (the amendment to this Act, introduced on 7 October 2013, repealed the Act of 12 September 2002 on electronic payment instruments). However, the scope of this protection is not complete, as in the event of an unauthorised transaction only amounts above 150 Euros are refunded to the user (which means that if we do not have insurance, we will have to pay for all transactions not exceeding this amount out of our own pocket).

In addition, this protection only applies to financial losses incurred prior to the card reservation. Therefore, if you want to make sure that whether it is due to a lost or stolen card, all the money will be returned to you (even if the loss was less than 150 euros), you should opt for credit card insurance. What else does insurance give us? Another advantage is the fact that in this case, the protection is also indifferent to those cards that have fallen victim to skimming, i.e. theft as a result of scanning the data stored on the magnetic stripe of the card.

Look out! Look out!

The Bank shall not be financially liable for such unauthorized transactions (regardless of the amount) which occurred due to the fault of the customer, i.e. e.g. as a result of lending the card to another person or a delay in reporting the card theft.

What to do if I don't notice the credit card disappearing immediately?

If this is the case, you will also need to have insurance. Most insurance covers unauthorised transactions up to 72 hours before the loss of "plastic". What is important, this protection covers transactions executed in close proximity, PIN-confirmed transactions and even online payments.

Will the bank return the stolen cash to me?

Imagine that you lose your money not when you use a card, but when you withdraw money from an ATM or make a withdrawal in a shop. What happens then? If you take out an appropriate policy, the bank will return the stolen cash to you. Remember, however, that just as with most policies, here we are dealing with the liability of the insurer, in addition, the recovery of money will be possible only if the theft occurs within 2 hours from the time of cash withdrawal.

Will the bank pay off my debts?

Some credit card insurance also ensures that your debt will be repaid in the event of death, loss of job or serious accident. The advantage of this type of insurance is a low premium, which is usually a percentage of the current debt balance.

When considering whether to insure your credit card, you should first of all consider whether you need such protection and which of the offered policies best meets your expectations. It is also important to know the associated costs and situations in which the insurer may not pay us compensation despite the insurance policy.

The most interesting offer seems to be the insurance against unauthorized use of the card and the guarantee of debt repayment in the event of death or illness of the card holder. If we want to feel safer for a small fee - in this case we should buy credit card insurance and be sure that our money is safe.