What's the value?
All of that adds up to a lot of scrutiny for products that often fail to provide significant value to consumers, many credit industry analysts say.
"It's well-known that many of these products have little value," says Barry Paperno, a credit scoring expert and Credit.com's community director. "Some of these products prey on people who don't understand" the terms.
Some add-on products, such as credit monitoring, can be useful, especially for people like the recently divorced or victims of identity theft who worry that someone might try to hijack their credit, says Gerri Detweiler, Credit.com's consumer credit expert.
Other add-ons such as debt protection, in which the credit card issuer promises to cover minimal balance payments if the cardholder becomes disabled or unemployed, for example, often come with so many fees and so many hidden barriers to collecting benefits that they often cost more than they give back, Detweiler says.
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"I'm not a big fan of debt protection," says Detweiler. "I can't remember ever recommending that product to a consumer. Those plans are often too expensive for the little benefit they provide."
How to decide
How to tell the difference between a worthwhile credit card add-on service and one you should probably skip? Here are Detweiler's three tips on how to decide.
1. Shop Around. Many consumers don't think about buying products like debt protection or credit monitoring until they receive phone calls or marketing materials from their bank or credit card issuer. When confronted with the choice, and especially with some high-pressure sales tactics, many say yes right away.
That's almost always a bad idea, Detweiler says. If this is your first time hearing terms like "debt protection," that's a good signal to slow down. Maybe your credit card issuer really does offer the best plan out there. Maybe some other company does. Or maybe you don't need the product at all. The only way to know is to investigate.
"Your best idea is to shop around and not automatically take what your credit card company is offering you," Detweiler says.
2. Ask for details. Maybe your credit card issuer really does offer the best program. But you'll only be able to tell by getting all the details, Detweiler says. Especially when it comes to insurance-like products, including debt protection, make sure that you are not automatically excluded because of your type of employment or pre-existing conditions. "If consumers really understand what they're buying and they know they have a choice of where they can get that service, then I'm OK with offering it to them," Detweiler says.
3. Stay on them. Since many add-on products cover events far in the future, such as loss of employment or inability to make minimum payments, it's important to make sure that you keep track of the programs over time. If your issuer sends you paperwork with new terms and conditions, read it and tuck it into a file folder. If someday you need to redeem the services, make sure you follow the issuer's instructions for how to claim benefits. And if you are unexpectedly denied, report the company to federal regulators including the CFPB. As we know from the bureau's recent investigations and letters to the industry, federal regulators are on the lookout for abuses.
"Clearly, customers have to know what they're getting into, and know that they can shop around for the product that's right for their situation," Detweiler says.
Christopher Maag, contributing writer for Credit.com, graduated with honors from the Columbia University Graduate School of Journalism, and has reported for a number of publications including The New York Times, TIME magazine and Popular Mechanics.