Credit card companies try to get you to sign up for secondary products and services, often forms of insurance or new and convenient ways for you to get at your credit and use it.

These services are lucrative for the card issuers, but are not in your best interest.

Here are three credit card products you should avoid:

Credit Alert Monitoring

One regular pitch is for credit alert monitoring that helps protect against identity theft.  The service costs upwards of $17.99 per month and includes online access to your credit report and credit score from Equifax Canada.

The service claims to proactively monitor, manage and protect your credit and identity information and can detect early signs of fraudulent activity.

Many credit card issuers offer this service, as do the credit bureaus – Equifax and TransUnion.

Credit alert monitoring is expensive and unnecessary.  You can get a free copy of your credit report once a year and you can get instant access to your credit report and credit score online for less than $25.

Balance protection insurance

Another frequently marketed product from credit card issuers is balance protection insurance.

For a cost of 99 cents per $100 of the average daily balance you can protect your credit rating against unexpected job loss or disability.

Related: Best Balance Transfer Credit Cards In Canada

You might willingly agree to add this protection to your credit card thinking that because you pay your balance in full each month you’ll avoid the fee.  Not so.

The fee is based on the amount owing on your statement due date, or on your average daily balance, depending on the card issuer.

Balance protection insurance should be avoided.  Just like with mortgage life insurance, this product is aggressively marketed to unsuspecting customers.

You’re much better off keeping a small emergency fund and having proper term life insurance and disability insurance.

Access cheques

Most credit card issuers like to send out access cheques hoping you’ll use them to pay off balances from other credit cards or that you’ll find some other use for the cash.

The marketing material I’ve seen suggests you can use the access cheques for:

  • Visiting friends and family – create some memories that will last a lifetime.
  • Holiday shopping – the people you care about deserve the best.
  • Planning a summer getaway – you work hard; treat yourself and your family to a holiday

Sounds like a bad idea. The annual interest rate for access cheque balances is around 19.99%.

Related: Why A Mortgage Payment Vacation Is A Bad Idea

The transaction fee for access cheques is 1% of each transaction amount, with a minimum fee of $7.50.

Final Thoughts

Credit card issuers prey on unsuspecting customers by aggressively promoting products that aren’t in your best interest.

Whether you diligently pay off your credit card or you carry a balance from month-to-month, you should avoid these credit card products at all costs.

If you’ve been misled into buying something like credit alert monitoring or balance protection insurance, call your credit card issuer and cancel it immediately.

  • Check out this CBC Marketplace reportIs credit balance insurance worthwhile?

When used responsibly, credit cards are a good financial tool that can help you budget effectively, manage your cash-flow, and earn rewards.

Related: Top Cash Back Credit Cards In Canada

Just make sure you don’t fall into the credit trap.  Pay off your balance each month and beware of sales pitches for products you don’t need.

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