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What is credit card insurance?

Get peace of mind knowing your card balance is covered.

Updated

Fact checked

You can’t predict everything that happens in life, and certain events can throw you for a loop. For example, losing a job or suffering an injury can be impactful in a number of ways, but it can also complicate your ability to repay your credit card balance. To avoid this, some credit card issuers may offer you a payment protection plan, so you have one less thing to worry about.

However, this is not a standard credit card feature and you won’t find it with all providers. But if you decide to use this feature, expect to pay a monthly fee.

What is credit card insurance?

Credit card insurance — also known as payment protection, credit shield or credit guard — is an optional feature that covers your credit card payments if something unexpected happens to you. Covered events often include:

  • Involuntary unemployment.
    Losing your job without it being your fault.
  • Hospitalization.
    Being admitted to a hospital and under doctor’s care.
  • Leave of absence.
    Getting an approved leave of absence by an employer.
  • Nursing homestay.
    Being admitted to a nursing home and under doctor’s care.
  • Disability.
    Being unable to perform everyday activities due to sickness or injury.
  • Diagnosed with a terminal illness.
    Receiving a doctor’s diagnosis that you have a medical condition that will cause your death in six months or less.
  • Loss of life.
    Dying.

How does the credit card insurance plan work?

To get this feature, you must pay a fee on your monthly balance every month. For example, Synchrony Bank, the largest card issuer of store credit cards, charge $1.66 per $100 balance at the end of the month. So if your monthly balance was $1,500, you would pay $24.90 total for that month.

Remember, it doesn’t matter whether you pay your balance in full before the due date — you still have to pay the fee on the entire balance you’ve made during the month.

How much does the credit card insurance plan cover?

This depends on the card provider. Synchrony Bank covers balances of up to $10,000, meaning you won’t be liable for any unpaid balance up to the amount.

Eligibility

Whether you qualify for the payment protection coverage depends on your insurer and their policies. As a general guide:

  • All events must happen after you enroll in the insurance plan.
  • Be employed on a part-time or full-time basis.

How do I enroll in the credit card insurance plan?

This depends on the card issuer. However, in most cases, you can either enroll during your credit card application process or at a later date of your choice.

Compare credit cards with payment insurance plan

Name Product Filter values Rewards Purchase APR Annual fee
CardMatch™ from creditcards.com
See terms
See issuer's website
See terms
Use the CardMatch tool to find cards you're likely to qualify for with your credit score, without a hard pull on your credit.
Marvel Mastercard®
3% back on dining, select entertainment, Marvel and 1% back on all other purchases
16.49% for account type 1, or 21.49% for account type 2 or 26.49% for account type 3 variable
$0
Earn 3% back on dining, select entertainment, Marvel and 1% back on all other purchases.
PayPal Extras Mastercard®
3x points on gas and dining, x points on PayPal and eBay and 1x points on all other purchases
21.49%, 25.49% or 28.49% variable
$0
Earn 3x points on gas and dining, x points on PayPal and eBay and 1x points on all other purchases.
PayPal Cashback Mastercard®
2% cash back on all purchases
21.49%, 25.49% or 28.49% variable
$0
Earn 2% cash back on all purchases. Rates & fees
Rakuten Cash Back Visa® Credit Card
Extra 3% Cash Back on qualifying purchases made through Rakuten.com,
in Store Cash Back Offers, Rakuten Hotels and Rakuten travel.
From 26.49% variable
$0
Earn $10 after your first purchase.
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Compare up to 4 providers

Who is credit card insurance best for

Paying credit card insurance may not be for everyone. But you never know what can happen. If you’re the kind of person who wants peace of mind, knowing that no matter what happens in the future, your credit card balance will always be covered — credit card insurance may be worth your while.

Note, if you have many credit cards, make sure you get credit card insurance only for one or two cards you use the most.

Bottom line

By calculating the potential cost of having credit card insurance plan, you can determine whether this feature will be useful or not. If you think having peace of mind is worth the premiums you’ll pay, then it might be a good idea to get payment protection.

But if you don’t find this feature valuable, compare your credit card options until you find a card with features that appeal to your needs.

Frequently asked questions

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