“No cheap option” for credit card payment protection

Payment Protection Insurance (PPI) for credit cards is costing consumers hundreds and sometimes thousands of pounds each year, according to MoneyExpert.com. The independent financial comparison website says that even a relatively modest balance of £3,000 would attract an average annual fee of £270, or as much as £540 with the most expensive provider.

Payment Protection Insurance covers your monthly repayments in the case of unemployment, accident, sickness or death and is typically used in unsecured loans and credit card borrowing. The Office of Fair Trading recently called the schemes "overly complex" and recommended that it be investigated by the Competition Commission.

MoneyExpert.com analysis has revealed that the average cost of PPI on a balance of £2,000 could add up to £180 per year, or a hefty 75p for every £100 the customer owes. It warns that on the same balance PPI can cost double the average at £360 a year, and that even the cheapest providers would charge over £141.

According to MoneyExpert.com, only two out of 61 providers – Saga and Bank of Ireland – charge under 70p per £100. The typical charge is 72p and just under half of the 213 credit cards on the market charge over the average monthly fee of 75p per £100.

Sean Gardner, chief executive of MoneyExpert.com, said: “Many people don’t realise that they can purchase PPI with any major insurance broker – it doesn’t have to be an expensive add-on to their credit card. What’s more, there are often exclusions in the policies which are not made clear to consumers when they sign up.

“PPI can be useful if you are concerned about your borrowing and want peace of mind. The key to PPI is to consider specialist cover as an alternative to the scheme offered by your credit card provider. As things stand you’re very likely to get a better deal elsewhere.”

MoneyExpert.com offers payment protection insurance to cover your mortgage, income and personal loans. Its recommended mortgage payment protection insurance topped the Which? 'Best buy survey' for mortgage PPI.

MoneyExpert.com offers a unique service which enables people to find the financial products which best meet their specific needs, and which they are more likely to be successful in being accepted for. It includes exclusive research conducted by MORI, which reveals providers’ service levels. This information is married up with a financial database which lists the products suited to the customer. For the first time, people can review a product’s price, features and also the level of service offered by the provider to enable them to make a more informed choice.

MoneyExpert.com aims to demystify the complex world of personal finance, and to help inform customers of the choices available. The service can be found at moneyexpert.com.