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Mis Sold Payment Protection on Credit Cards

You have probably heard a lot about mis-sold payment protection insurance cover on loans, but probably less regarding mis sold payment protection on credit cards. Credit card PPI often gets lost in the noise and is sometimes regarded as less significant than insurance mis-sold on loans. In fact, mis sold credit card PPI can, sometimes, be worse than insurance mis sold on loans.

The cost of credit card PPI

While loan protection insurance is usually calculated as a percentage of your total loan amount and added at the start of your loan, credit card PPI is calculated on a monthly with the cost dependant on your outstanding balance. The cost varies from lender to lender, but is ordinarily somewhere between 79p and £1.50 per £100 outstanding. On an outstanding balance of £9,000 this would equate to between £71.10 and £135.00 per month. That's the equivilent of between £853.20 and £1620.00 per year! If the full costs of your cover was not explained to you, you may have been mis sold payment protection on credit cards and may be entitled to make a claim.

Low payout rate

In 2008, The Competition Commission looked at the payout rates for different kinds of insurances. It found that the payout rate for Loan insurance/ loan PPI was just 15% The rate for credit card PPI was just 11%. These figures are shockingly low and were certainly influenced, at least in part, by the high number of exemptions attached to this kind of insurance. Although in principle payment protection insurance supposed to step in and cover repayments where a policyholder is unable to, in practice their are only limited circumstances where a policyholder is able to make a claim.

What's not covered?

Common circumstances not covered include ailments such as back pain and stress. In addition to individual circumstances there are also a significant number of groups of people who are ineligible for cover and should not have been offered it in the first place. This often includes people aged sixty-five and over, people who are self-employed and people who suffer from pre-existing medical consitions.

 If you believe you have been mis sold payment protection on credit cards and would like help making your claim, call our team on 0207 471 2000

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