Credit Protector Shortfalls Revealed
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Hello, I have now created a website specifically devoted to exposing the huge flaws in the program known as Credit Protector. You can read the version on this page of shareamillion.com or you can go directly to the website I have created that exposes Credit-Protector as a program that overcharges beyond comprehension.
This particular page of shareamillion.com contains an example of financial trickery that I believe has harmed and continues to harm millions of Americans. I have analyzed the "Credit Protector" Credit Card Program and believe it is one of the biggest financial insurance scams ever sold to the American Consumer. Credit Protector is a credit card program that pays the monthly minimum credit card payment (not including the finance charge which is suspended) should the policy owner become unable to work. The monthly fee for Credit Protector is approximately 0.79 to 0.89 percent of the total principle that is due.
Lets examine how the Credit Protector program may have one of the worst ratios of intake of monies versus payout of monies ever perpetrated by an insurance group against its customers. Lets say a customer owes 10,000 dollars on a credit card. The minimum monthly payment is 1% of the principle plus 9.9 percent finance charges, or approximately 100 dollars plus 82.50 a month in interest. Above and beyond this 182.50 monthly minimum the customer already owes, Credit Protector requires another 0.89 percent or approximately 74 dollars for the first months coverage.
If a customer can afford to pay an extra 74 dollars each month for Credit Protector, wouldn't the best use for that money be to pay off the actual credit card debt? What about depositing that 74 dollars in an interest bearing account as an emergency fund? The monthly Credit Protector bill causes the customer's existing credit card principle to remain at a higher revolving amount, which increases monthly finance charges.
After two months of Credit Protector enrollment, the customer's credit card account has been diverted of approximately 147 dollars that could have gone towards paying down their credit card principle. Instead their 147 dollars paid for two months of Credit Protector "protection". The remaining principal in the customers account remains increasingly higher each and every month that a customer is signed up for the Credit Protector program.
After three months worth of Credit Protector coverage, one would have paid approximately 222 dollars toward Credit Protector plus the equivalent of 6 months worth of interest charges on the 74 dollar monthly fee. In my opinion Credit Protector has basically attached itself to the customer's credit card account as a "tax", preventing the customer from the real goal of actually paying down their credit card debt.
By the end of the first year of enrollment in Credit Protector, a 10,000 dollar balance and 9.9% interest rate will have cost the customer approximately 816 dollars just for basic "coverage". But it's even worse than that. An extra 78 monthly interest payments (12 + 11 + 10 + 9 + 8 +7+ 6 + 5 + 4 + 3 + 2 + 1) are due on the average Credit Protector monthly charge of 74 dollars, which equals an additional 577 dollars of finance charges! The cost after one year for using "Credit Protector" on a 10,000 credit card debt is 816 dollars plus 577 dollars, or 1,393 dollars, and that is if your credit card has a relatively low 9.9 percent rate!
Now here is a critical question that ALL insurance companies are supposed to responsibly consider when setting their insurance rates. What is the ratio of money that the insurance company will collect on a specific insurance program versus what they will pay out to those same policy holders? Does paying 1,354 dollars to receive one years worth of Credit Protector coverage with a probable maximum first year coverage of approximately 1,200 dollars seem fair to you? It appears that the maximum that Credit Protector will pay out is LESS than what a customer pays in premiums for over 99% of those who sign up for the program.
What if it takes a while to file a claim and actually receive money? What about the time it takes to file all the necessary paperwork, time that could be spent looking for work or rehabbing from an injury? Does Credit Protector cover loss of a job due to layoff, or only due to an injury? The ratio of intake of money to paid out claims may be even worse than what I am suggesting it may be. Imagine paying 25,000 dollars for one year's liability insurance just to protect your own car that is valued at 20,000. Would not that insurance company be charged with insurance fraud? Either that or it's expected that the policyholder will get in more than one accident within that one years time.
The actuarial tables that are being used to set the rates for Credit Protector are so far off I would like to know who signed off on the rates that have been established? It is my opinion that the person who set the rates for Credit Protector has probably done more harm financially to more Americans over the past several years than most terrorists could ever dream of doing.
How many manipulative one on one phone conversations go on on a daily basis in this country in which honest, hard working americans are tricked into signing up for Credit Protector? I wonder what chain reaction of financial consequences this probably illegal program has cost some Americans. I pray the Credit Protector program is not being used in other parts of the world. Do you not want to see the Credit Protector program stopped, fixed, and a payout made to EVERYONE who has signed up for the program in the past, I do.
If I am right then Credit Protector is the biggest financial scam ever hoisted on the American people. Anyone with a large credit card debt that signed up for Credit Protector has probably been over paying by anywhere from 5 to 10 times more than what they should have been paying.
Credit Protector, or Debt Creator?
What can be done to fix Credit Protector? I would first like to spotlight what should not happen. I would not like to see a judge rule that Credit Protector must give free coverage for a year or two to anyone who signed up for Credit Protector in the past. That would be an intellectually elite ruling that creates what looks like punishment, but is actually nothing, or as Shakespeare once wrote, "full of sound and fury, signifying nothing". Federal judges have actually used this ploy in the recent past to "punish" big corporations for breaking the law by letting them give away their products for free. Federal judges punishing corporations by allowing the corporation to give out their products for free? Huh?
In my opinion, refunding 80 to 85% of what has already been paid into Credit Protector, plus accrued interest is the minimum that should be be refunded to ANYONE who has ever purchased the Credit Protector program. Many overdraft penalities that were assessed because Credit Protector fees actually put someone's account into the red need to be re-examined as well. If an "over the credit line" penalty caused a very bad chain reaction to occur to the person's credit, that too needs to be re-examined as well. Can you imagine being overcharged for a suit then being charged a penalty by the suit maker because you didn't wear the suit?
If a judge ruled that financial institutions must refund money plus interest to anyone who purchased the Credit Protector program it could cause some financial stocks to temporarily fall. But the likelihood is that by righting a great wrong that has been done to possibly millions of Americans, the stock market will ultimately benefit. Overcharging for financial services can never help the stock market and the people it serves in the long run. Overcharging for services eventually harms everybody.
shareamillion.com hopes to immerse the proper governing agencies into reviewing programs such as Credit Protector. My hope would be that these governing agencies would require the credit card companies to REFUND ALL costs associated with the Credit Protector fees. This could be tens of millions of dollars, perhaps a lot more. Do you not want to see the Credit Protector program stopped, fixed, and a payout made to EVERYONE who has signed up for this treacherous program in the past?
There are several ways to fix the Credit Protector program. One way is to adjust the monthly percentage rate to fairly align with the amounts being paid out. Although I am not a certified expert in this area, In my opinion the proper and fairer rate should be between .09 to .19 percent of the total due, not the outrageous 0.79 to 0.89 percent that is currently being charged. Or, the .79 to .89 percent can ONLY be charged on the amount of the credit card debt that Credit Protector is likely to pay off in one years time. If the maximum Credit Protector can payout in the first year is only 1,000 dollars of a 10,000 dollar debt, then the customer should only be billed the .79 to .89 percentage rate on the first 1,000 dollars of the credit card debt, not the entire credit card debt that the customer actually has!
Another method for fixing Credit Protector would be to simply calculate the most that Credit Protector can pay out in one years time from the enrollment date and then charge a reasonable percentage of 10 to 25% of that total. If the most that Credit Protector will pay out in a years time is 1,000 dollars, then the actual yearly billing should probably be between 100 dollars to 250 dollars, not 1,395 dollars that is currently billed.
I find it ironic that an insurance program that charges an arm and leg for Credit Protector also includes coverage for losing a limb. I have avoided bringing up the loss of limb additional coverage because in my opinion it is an additional policy that is simply rolled into Credit Protector to make it seem like Credit Protector is a fair program.
The devils advocate would say, "but no one puts a gun to the head of those who sign up for Credit Protector" so "buyer beware". I would say "Yes, but no". Credit Protector is such a financial pot of gold for the financial services industry that if you own credit cards and have debt, you probably have been called and asked to join Credit Protector, and you probably get called a lot. I used to get called weekly, sometimes two and three times a week by the Credit Protector people. Credit Protector has quite possibly hurt the telemarketing sales industry by calling the same homes so many times that it motivated people to sign up for the do not call list. I for one signed up for the Do Not Call List specifically because of all the calls that Credit Protector was making to my residence.
The Credit Protector program makes so much money for the banks that they just cannot help themselves as they try and get everybody to sign up for the program. Another problem with "Credit Protector" is the name. If someone does not want to sign up for Credit Protector the telephone solicitor can prey on the customers insecurities by saying, "Oh, you DON'T want to protect your credit!" This tactic makes one feel guilty, no? In addition, Credit Protector offers remedial "freebies" such as a gas coupon, or a check, both of which pale in comparision to the financial obligation will incur if someone already has significant debt and chooses to sign up for Credit Protector.
It is possible that Credit Protector has helped some people. If someone owns a small amount of money on a credit card and they really can't work for a few months the tiny amount they owe per month that Credit Protector would cover could prove beneficial. Apparently there is a birth provision which might provide a month or two of relief. Although is it just a respite from paying the bill, or does it actually pay down the bill for that month or two?
Perhaps someone actually suffers an injury and they can no longer work. But that still does not change the fact that what Credit Protector charges all of its customers versus the amount that Credit Protector pays out is so out of balance that maybe somebody should go to jail for perpetrating this scam on the american public, and this scam has gone on for far too long.
The next page of this website features an expose on Capping Credit Card Interest Rates, why it's the logical and right thing to do.