Jump to main content of pageaccessibility informationSitemap
5 Aug 2020

News

Credit Card & Store Card PPI – Do you know if you have it? What it covers? Or what it costs?

Michelle Slade, analyst at moneyfacts.co.uk comments:

“As we await the outcome of the OFT review into the sales process and pricing of PPI, much attention over the last few months has focused on the issues of personal loan insurance. But with £54.9 billion outstanding credit card debt in December 2006, the credit card PPI market is equally important. 

“The recent fine of GE Capital Bank, a major player in the store card market, reinforces the message that card PPI is also an area that has its own problems in terms of PPI sales techniques and general transparency.

How does it work?
“Credit card PPI is paid on a monthly basis, calculated at a price per £100 of the outstanding balance of your card. So even if you repay your balance in full, the insurance premium will still be payable based on your statement balance, as ‘cover’ has been in force for that previous month.

“Like most insurance policies, the exact terms and conditions will vary between providers. But typically the insurance will cover accident, sickness, unemployment, life cover and often hospitalisation benefit. Normally the policies will include a ‘qualification period’ and require you to be unable to work for a period of between 14 and 30 days before a claim can be made.

“There will often be many exclusions to these policies, which typically include pre-existing medical conditions and in some cases back pain and stress related causes, two of the main causes of work absences.

“Should you be successful in making a claim, the insurance will normally be subject to a maximum of 12 monthly payments (if you remain off work), at either the minimum payment or a set level of 3-10% of the balance outstanding.

How much does it cost?

 

Credit & Store Cards

PPI charge per £100

Number

% of cards

45p

2

0.71%

59p

4

1.42%

67p

2

0.71%

70p

6

2.14%

72p

57

20.28%

74p

6

2.14%

75p

9

3.20%

76p

74

26.33%

77p

6

2.14%

78p

38

13.47%

79p

46

16.31%

85p

5

1.78%

89p

1

0.36%

95p

1

0.36%

99p

2

0.71%

£1

5

1.78%

£1.30

1

0.36%

£1.50

16

5.69%

Moneyfacts.co.uk

 

“Research by moneyfacts.co.uk has found the average cost of card PPI is 80p per £100, but can range between 45p/£100 to as much as £1.50/£100.

See table opposite for full survey

Average monthly cost – based on balance of:
£1K      = £8
£3K      = £24
£5K      = £40
£10K     = £80

 

 

 

 

 

“Taking insurance or having ‘rainy day’ savings to protect your day to day finances from unforeseen circumstances should be a must, especially as our disposal incomes are becoming more and more squeezed with lending rates, utility bills and council tax rises hitting our pockets hard over the last twelve months.

“But what you must ensure is that you are getting value for money, know exactly the cover you receive and most importantly willingly choose to take the policy.

“So when signing up for a new credit card or store card, check that you have opted for the insurance only if you really want to and have the full information available. Sales staff are highly targeted to sell PPI, so could be very insistent. But also remember that as it is paid on a monthly basis, subject to cancellation terms, the policy can be cancelled at any time.

Remember, you don’t have to buy your credit card PPI cover from your card provider; you can purchase this insurance from a standalone independent broker such as www.paymentcare.co.uk.

“Perhaps look to review any existing life or income protection policies, these may do the job equally and if not better, at a much more competitive rate. After all, you have the ability with these to shop around for the best deal and not just accept the price, which your card provider quotes. While it is important to be insured, there is no need to be over-insured.”

NOTES TO EDITORS:

Moneyfacts Group
Moneyfacts is the UK’s leading independent provider of personal financial information and our data is used and trusted throughout the financial industry. 

Regular Charts
We can supply you with regular weekly or one-off selection charts on many financial products including savings, mortgages, credit cards and personal loans. Our charts are independent, impartial, totally accurate and up to date. 
Please call Andrew Hagger on 0870 2250 512 for further information.

 

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

Think carefully before securing other debts against your home, your home may be repossessed if you do not keep up repayments on your mortgage.

Go Direct.co.uk is a trading style for website purposes of Go Direct UK Ltd.

Go Financial Services is a trading style of Go Direct UK Ltd which is an appointed representative of Personal Touch Financial Services Ltd which is authorised and regulated by the Financial Conduct Authority. Registered in England & Wales Company 5703224. FCA Number 456600

We normally do not charge a fee for mortgage advice, however this is dependent on your circumstances. Our typical fee would be £500

Remortgages | Mortgage Repayment Guide Remortgage Guide | Life Insurance | Mortgage Protection Life Insurance | Decreasing Term Life Insurance | Accident Sickness Unemployment | Accident Sickness Unemployment Cover | Builds and contents quote | Conveyancing Online | Btl Mortgage | Mortgage Rates | Free Mortgage Advice | Online Mortgage Application |Shared ownership mortgages | Site Map