They’ll Always Win

As part of a promotion,I was enrolled in something called a Card Protector Benefit after signing up for a new credit card. The idea is that a percentage of your monthly balance is paid back into a fund like an insurance policy in case you’re ever in a situation where you can’t pay your monthly bill.

I try not to use my card too often and I don’t anticipate losing my job so I wasn’t totally excited about this program. But people get busy and several months went by before I called to cancel it. Naturally the woman on the phone tried to convince me not to leave the program by informing me of its other benefits. It turns out that they pay out for more than just job loss. They pay out for other life changing events such as purchasing a new home,having a child,graduating from college,things like that.

Having purchased a home a little while ago,she convinced me to stick it out at least until I received what I had coming to me for that event. Turns out that’s two months of bill payment (courtesy of the card company) and a refund of those two months of the program fee.

I didn’t intend to give it too much more thought until I had received those benefits (and it was time to cancel again) but for some reason I’ve been thinking about it this morning.

This whole concept is genius for many reasons. Like insurance,the company bets that not everyone they collect from will use the benefits so they make money. They still win when you collect because you’re providing them with valuable personal data that would otherwise be unavailable to them.

For instance,I collected my benefit because I purchased a new home. Since most people don’t purchase homes on credit cards,whether I rent or own would be information they wouldn’t know unless they asked. I’m voluntarily providing them with this information. It just so happens that this credit card company also provides many other services such as mortgages,student loans,auto financing,etc. Now that they know I own a home,how long do you think it will take before I’m bombarded by marketing material asking me to consider refinancing or describing home equity products?

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