Is your credit card company charging you unnecessary "balance" insurance?

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"Look After the Pennies and the dollars will look after themselves"!

That is a mantra that I have preached on these pages and, once again, it will prove it's worth to you if you take this simple suggestion to save yourself "thousands" of dollars on your credit card bills.

The truth about credit card balance insurance. - If you have recently obtained a credit card, you probably have unwittingly purchased this insurance and it will cost you literally thousands of dollars over years. (On average approx $300 per year) Many of you don't even know that you have this insurance, or that the premium is being included in your credit card balance every month, unless of course, you are watching your pennies.

Here it is in a nutshell! When you apply for a credit card, and you are approved, you may or may not hear the selling agent say to you that there is included a "one month free" premium for "balance insurance"! It will usually be blurted out quietly, almost as an after thought along with the caveat that it can be canceled with a phone call. In 95% of these case, it is completely unnecessary and here is why!

Firstly, it is not balance insurance. It is "payment" insurance. You must lose your job to collect on this insurance. Then, it only pays your "monthly payments" and not your balance. For instance, if you lose your job and have a balance of, let's say, $5,000, the insurance will pay your monthly payment until you are again gainfully employed. However, credit card policy stipulates that, if you don't pay off your balance every month, they will charge interest (often 19% or more) on the "entire balance". In other words, that interest will probably add more onto your card than the insurance paid off "and" it is repeated again the next month.

This, coupled with the Nonsense of keeping a credit card balance , will cost you dearly over time. Banks and credit card companies brag to their shareholders about making billions from this lucrative insurance. However, it is only lucrative for them, and not for you. Do yourself a big favor right now.

Call your card company and ask if you are paying for this insurance. If you feel you don't need it ( everyone's circumstance is different) Cancel it immediately and then, if you are as incensed about it as you should be, demand they pay you back every sent of the premiums you paid without knowing you were even paying them. Your retirefund demands it!

They may or may not pay you back, but with the millions who are unwittingly paying for this service that most don't need and didn't ask for, it is usually cheaper for the card company to just pay back the 1% who demand their money back and keep the controversy to a minimum. They make a lot more money that way.

"Look after the pennies, and the dollars will look after themselves"!

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If you were walking through the desert, with four camels on your back, and had two flat tires, How many pancakes would it take to bury an elephant?

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The Answer: TWO! Because an alligator only eats two ice creams!

Confused?

You should be, because nonsense is nonsense. There is no explanation for nonsense, and sadly, there is no cure for stupid!

If you run up a huge credit card balance, buying for the sake of buying, you create nonsense. If you fail to pay off your credit card balance every month, then you may well be stupid! (sorry, but the truth often hurts) At the very least, you are not looking after your pennies, and as I have said before, if you
" look after the pennies, the dollars will look after themselves "!

In a nutshell, if you qualify for a credit card which often costs you 19% or more, then you would also qualify for a line of credit which usually costs 1 or 2% above prime. If you absolutely cannot pay off your expenditures every month, at very least, you should carry the balance on your line of credit and NEVER on your credit card!

This is a simple strategy which can save you huge amounts of money over time. Now do yourself another financial favor (after you secure the line of credit). Call your credit card company and advise them that you are shopping around for "best rates" and ask them directly to drop your interest rate. Many companies will drop it to as low as 10% just to keep you as a customer. Some won't! That's OK because that is why you are "shopping around for best rates"

Stop the nonsense now! Start being smart!

"Look after the pennies, and the dollars will look after themselves"!

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Pointing you to Europe, for free, in Executive Class!

"Look after the pennies, and the dollars will look after themselves"!

That statement rings true for many parts of life, as well as finance. If you look after the little things, usually the big things fall into place. If you save your pennies, they turn into dollars. Wealthy people have a number of traits in common, however two stand out. 1. They usually own their own businesses and 2. They always demand value for every dollar spent!

One of the ways in which my wife and I are able to travel is through the practical use of travel points. When you are running a business, this can be a great offshoot of business travel or "any" expenditures. Now, How can you do it in retirement?

We will fly to Europe (from Canada) this fall, in Executive class, for free! (We will have to pay the tax on the tickets but the tickets were purchased with points). How did we do that, since I have been retired for two years? In point of fact, I flew my entire family of four to California and Florida for free. My wife and I have traveled to Las Vegas, twice, in Executive class , New York twice, Atlantic City once and Vancouver, Twice, to take Alaskan Cruises, all for free! This year we are flying to Rome (Executive Class) and taking a Greek Island Cruise .

Here is the strategy I use for this, and it is quite simple, if you have the discipline. I have a gold travel credit card (CIBC-Aeroplan) and my wife also has a card (second card) on this account. Every month (every day) we flush every single purchase through these cards. Gas, Groceries, Clothing, power bills, hair cuts, hair do's, bridge tokens, you name it, we pay for it with these cards. We basically get one point for every dollar spent. Sometimes, we receive promotional coupons, and we use them to the max, without fail.

The discipline comes in, when the monthly statement comes in. We pay it off every month. We do not pay "any" interest at all. We do this religiously. We leave our monthly cheques in our account. We use very little cash! The cash in your pocket is for "emergencies only"! We always "double down" on points by utilizing the companies who are in the "Aeroplan" fold, (gas stations, drug stores, retailers etc) who give out more points for using their services. This is not an extra expenditure because they are services we use anyway. You can use these same strategies for your favorite points plan as well!

Most of all, we pay off the credit card bill every month, paying "no interest" as that would defeat the purpose. We "look after the pennies, so the dollars can look after themselves"! I have been doing this for 20 years, and it has obviously paid off big time, in our mission to see the world from the deck of a cruise ship.

It will pay off for you too!

So what are you waiting for?

Get a great Travel Guide! and, don't forget your passport!

Bon Voyage and Arrivederci!