As a parent, you don’t want your children to inherit your debt. For this reason, some consumers in Eugene, Albany and Corvallis have opted to pay for a protection plan that will pay off the balance of their credit card debt in the event of their death. Most major credit card companies have offered variations of such products—until now.
Chase, American Express, Capital One and Bank of America have all recently announced that they are terminating their payment protection plans. For Chase cardholders, the program will remain in effect until May 2014. After that, however, consumers who have paid thousands of dollars for the protection service will have done so for naught. For example, an elderly woman who has $38,000 in credit card debt has paid $16,000—nearly half of the outstanding balance—for Chase’s protection service over the years. Now, instead preventing her beneficiaries from paying the debt when she dies, they will inherit it. Many people are upset by the announcement and feel it is unethical, but the contract agreement gives the credit card company the right to make changes to the terms or terminate the program at any given time. Financial experts typically recommend that consumers should pay down the balance of their credit card debt rather than paying for a payment insurance product that is rarely used.
Consumers who are struggling with overwhelming credit card debt may also want to speak with an attorney regarding the advantages of filing for personal bankruptcy. It is possible to discharge credit card debt by doing so.
Source: Los Angeles Times, “Debt after death: Chase pulls plug on credit card insurance plan,” David Lazarus, Oct. 7, 2013.