Lenders increase payment protection insurance
Credit card issuers are attempting to sign-up more fee-inducing programs, due to a sharp reduction in their revenues in recent months.
A new report suggests one of the programs lenders may be steering customers to is payment-protection insurance.
For a monthly fee, this insurance program offers consumers the chance to suspend charges and minimum payments when experiencing sickness or unemployment, according to Chicago Business. Costs for the protection can vary by company, but it can run as much as 80 to 90 cents on every $100 of credit card debt.
“There is a growing movement on the part of the banks to enroll more people in payment-protection programs,” Dennis Moroney, research director at advisory firm Tower Group, told the news source.
Some consumers have reported being signed up for the fee without consent, Chicago Business says. Some like David Paris, a consumer currently suing Discover in California for improper enlistment in the program, have taken legal action.
However lenders say improper sign-ups are infrequent and that they have no incentive to increase customer dissatisfaction. Customer satisfaction with the industry rose 9 points this year, according to a recent JD Power and Associates poll.