More than a million people have been lured into taking out loan cover for a credit card through misleading advice, Which? reveals today.
Almost 1.3 million people mistakenly believed that taking out payment protection insurance (PPI) would improve their chances of being approved for a credit card, our research found.
PPI is sold alongside loans, credit cards, finance agreements and mortgages to cover repayments if people are off work because of illness or unemployment.
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.
Credit card PPI is worth more than £970m a year to the industry and each policy costs consumers an average of £127.60.
In our poll, 28% were told by their provider that having PPI was a good idea.
Credit card cover makes up the largest slice of the PPI industry, accounting for 22 % of PPI revenue, but only an average of 11% 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 may never reduce.
Doug Taylor, a personal finance campaigner at 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 piece 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 £970m 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.’
If you have PPI on any products, then it might have been mis-sold. We have a checklist to help you – you may be able to claim your money back.
See our PPI advice page for more on claiming. back your PPI.