Cardholders paid $2.4 billion on unnecessary credit protection services

Cardholders paid about $2.4 billion on 24 million accounts for debt protection products in 2009, according to the Government Accountability Office.

Information from the nine biggest credit card companies indicated that cardholders only received 21 cents for every dollar spent on fees for debt protection products, according to the Street.

In that same report, the Government Accountability Office recommended the Bureau of Consumer Financial Protection look into the benefit of such services to customers and then inform them of their options.

The Consumer Finance Protection Bureau fined credit card company Discover $214 million for misrepresenting the need for payment protection and credit monitoring services to clients. In July, Capital One paid $210 million for the same reason.

While credit protection could help in instances of unemployment or disability, cardholders would be better served by paying down the balance instead of spending the money on monthly fees and payments towards the payment protection services, according to The Street.

Instead of paying up to $15 per month for a Credit Monitoring Service, cardholders should take advantage of free services, like text alerts for account activity, getting a free credit report at annualcreditreport.com and when necessary, using the free protection offered against fraud.

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