BRITONS are being misled into taking out Payment Protection Insurance (PPI) on their credit cards, says Which?
Almost 1.3 million people mistakenly believed that taking out PPI would improve their chances of being approved for a credit card, according to new research carried out by Which?
Just over 9.8 million people in the UK have credit cards with PPI attached. Of these, 13 per cent wrongly believed that getting PPI was a condition of their credit card deal or that their application was more likely to be accepted if they had it.
With credit card PPI worth over £970 million a year to the industry and each policy costing consumers an average of £127.60, it is easy to see why almost three in 10 (28 per cent) people were told by their providers that having it was a good idea, said Which?
Credit card cover makes up the second largest slice of the PPI industry, accounting for almost a quarter (22 per cent) of the PPI market, but only an average of 11 per cent is ever successfully claimed.
PPI is sold alongside credit cards, loans, finance agreements and mortgages to cover repayments if people are off work because of illness or unemployment.
Credit and store card PPI often only covers the minimum amount that must be paid each month, meaning your balance might never reduce.
Doug Taylor, personal finance campaigner, Which? said: “Credit card PPI is a modern day snake oil - it’s a useless product, expensive and poorly designed.
“As the credit crunch continues to take hold, people want to be protected and have peace of mind but credit card PPI, like a house of cards, won’t give you the support you need.
“In this time of economic uncertainty, people are effectively throwing away £970 million each year, when they should be encouraged to seek independent financial advice about protecting their finances as a whole.
“No-one should have to take out PPI on their credit card. Credit card PPI is the elephant in the room that can no longer be ignored.”
If you have PPI on any products, then it might have been mis-sold. Follow this simple checklist to see if you might be able to claim your money back. If you can answer no to one or more of these questions, then you might have been mis-sold:
- Optional - Did the adviser make it clear that the insurance was optional (if this was the case)?
- Exclusions - Did the adviser tell you about the “significant exclusions” under the policy? For example, the exclusion that states you won’t be covered for any pre-existing medical condition, you might not be covered if you are over 65 or if you are self employed or on a fixed term contract?
- Paying for insurance up front - If you took out a loan or finance agreement, did the adviser make it clear that you would have to pay for the insurance up front in a single payment?
- Borrowing to pay for insurance - If you had to pay for the insurance as a single premium, did the adviser make it clear that the insurance cost would be added to the loan and you would be paying interest on it?
Insurance expires before loan - If your PPI policy expires before your loan or finance agreement does, you'll be paying interest on insurance that is no longer in force. Did the adviser make this clear?
For more information on how to make a complaint and begin the process of claiming back your PPI, visit www.which.co.uk/ppi.
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