Research shows almost 10 million people are paying PPI for credit cards.
Which? magazine has claimed that over 9.8 million people with credit cards are paying an average of £127 each for payment protection insurance.
Research shows that almost 1.3 million people buy credit card PPI in the belief it will improve their chances of being approved for credit and that providers positively encourage this view.
Doug Taylor, personal finance campaigner at Which?, said: “Credit card PPI is a modern day snake oil - it’s a useless product, expensive and poorly designed. As the credit crunch continues to take hold, people want to be protected and have peace of mind, but credit card PPI, like a house of cards, won’t give you the support you need."
Commenting on the findings, Sara-Ann Burgess, of Burgesses, said: “I applaud this campaign from the consumer watchdog - people need warning about this product. Ninety five per cent of premiums are taken in commission by providers, very few claims are ever paid and it will not provide a financial safety net for those with mounting debts.”
She added: “Credit card PPI only pays the outstanding minimum monthly balance leaving an outstanding debt which will still have to be paid once the 12 month payment period expires. Consumers are better off reducing their level of debt rather than spending their money on insurance that will not pay out when it’s needed. If the policy does pay out – and only 11% are ever successfully claimed – it will have little impact on the overall amount owed on the credit card.”
Credit card PPI is worth over £970 million a year to the PPI sector.