Payment Protection for Credit Card
If you have payment protection cover on your credit card then it is possible your
cover was mis-sold and that you may be entitled to make PPI claims
for compensation. Payment protection is a type of insurance that is supposed to
protect a borrower from financial hardship in the event they are made
involuntarily unemployed. The cover is supposed to work by stepping in to take
over repayments, but it does not always offer the level of cover customer's
expect, can be expensive and has been mis-sold.
Payment Protection for Credit Card: How protected are you?
In 2008 the Competition Commission investigated the rates of payouts for
different kinds of insurance including payment protection for credit cards.
While some cover, like car insurance, had a high payout rate, the rate for
payment protection insurance was very low. Loan insurance payouts were said to
be 15% while credit card PPI was just 11%. This means that, potentially, nine
out of every ten people who have credit card PPI may be unable to use it.
The cost of Payment Protection for Credit Cards
The cost of credit card PPI can vary quite considerably as it is linked to the
customer's outstanding balance. On average the charge is applied at a rate of
79p per Â£100 outstanding. This means if you have an outstanding balance of
Â£10,000 you may pay in the region of Â£79.00 per month. This is the equivalent of
Â£948.00 a year.
The mis-selling of Payment Protection for Credit Cards
In 2006 the Financial Services Authority investigated the way payment protection
insurance was being sold. It found significant failings and, as a consequence,
several lenders were fined. Some of the key failings identified included
policies being added without the customer's agreement, policies being sold
without full terms and conditions being explained and customer's being sold
unsuitable policies they did not need or could not use. As a result of the
Financial Service Authority's investigation, public awareness of the issue of
mis-selling was raised and the number of people making a PPI reclaim
If you believe you may have been mis-sold a policy and would like help with
your claim, call our team on 0207 471 2000.
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