FOOL'S EYE VIEW
Don't Bother With Card Protection

By Jane Mack (TMFJane)
August 14, 2003

My husband's just had a phone call from the bank trying to sell him Card Protection insurance. It'll cost him £35 for three years of protection or £55 if he and I go for a joint policy.

Regular readers may recall that a couple of weeks ago my husband got his bag nicked from his car. It was found dumped in a lay-by a few hours later and, apart from his mobile phone and some cash, virtually everything was still in it, including all the credit and debit cards he'd just cancelled.

It was cancelling all the cards that was a bit of a pain. As I said in the article it took him about an hour and a half to round up all the necessary statements so he could call and cancel each of them. If he'd had card protection he could have made a single phone call and someone would have done all the work for him including ordering replacement cards.

And that's it. If he'd had card protection that's what he would have got for his money – the ability to make one single phone call instead of several. I don't know about you but I don't call that value for money.

The woman from the bank kept my husband on the phone for about 20 minutes with her sales pitch and after the call he was all set to sign up to the scheme. He couldn't understand why I started laughing.

"But it protects you from thieves who use your cards to go on a spending spree," he said.

"You're already protected by the law," I said.

The fact is, it's the issuers of plastic cards rather than individual cardholders who bear the initial cost of fraudulent use. Your maximum liability on credit, debit, and bank-issued charge cards is £50 for fraudulent transactions made before the issuer is notified and, in most cases, issuers waive even this small liability.

Obviously your liability is unlimited if you've been grossly negligent such as writing your PIN on the card or if you've played a part in the fraud yourself but an innocent person who gets his cards nicked is not liable for the money that's spent on it by a thief.

So what's the point of the card protection? Does it offer anything else other than the ability to make one free phone call instead of several?

Well, if they get nicked abroad then the card protection company will often advance you emergency cash if you're stranded. But so will your travel insurer so why pay twice for the same thing?

As it happens I think the policy the bank is offering my husband isn't too bad a price. Some of the others cost at least 30% more but even so, I don't think it's value for money.

In case you're not aware of the other benefits you get with a credit card you're also protected if you buy goods or services with a credit card costing more than £100, and they turn out to be faulty. The card company as well as the supplier is jointly responsible for putting matters right. And bear in mind that some issuers offer up to 100 days free insurance against theft, loss or damage on most goods bought on their credit cards.

There's also the usual range of perks offered by various card companies such as discounts on holidays, membership of car rescue services and free assistance with legal, travel and medical issues.

Anyway, back to stolen cards. Card Watch, the card industry's education and awareness campaign group, gives practical advice to cardholders and retailers about preventing plastic card crime.

Don't forget you need to report the loss or theft the moment you realise they've been lost or stolen. All issuers have 24 hour emergency telephone numbers. Unless you can't be bothered to make all those calls and would rather pay for card protection so someone else can deal with it, of course.

Find out more about keeping your cards safe in the Security section of our Credit Card Centre.