Which? slams PPI 'snake-oil'

10/09/2008

Payment Protection Insurance (PPI) for credit cards has been branded "snake-oil" by a consumer group today.

According to Which?, the insurance is often miss-sold by providers, and does not offer good value for money.

The cover claims to provide financial protection for people who take out loans and credit cards and then face a life change which leaves them less able to pay their debts, such as redundancy.

However, Which? pointed out that, in many cases, PPI only repays the minimum payments on cards each month if it is used.

Moreover, a poll from the group suggests that more than one in ten customers only took out the insurance in the first place because they thought that its purchase was compulsory, or that it raised their chances of getting credit applications approved in the future.

Both of these beliefs are untrue.

Doug Taylor at Which? said: "Credit card PPI is a modern day snake oil - it's a useless product, expensive and poorly designed.

"In this time of economic uncertainty, people are effectively throwing away £970 million each year, when they should be encouraged to seek independent financial advice about protecting their finances as a whole."

Tags; Debt Management and Banking, Credit Card Lifestyle,

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