Credit card companies spend a lot of money convincing you to sign up for their cards.  Once they have your business, most card issuers will continue to bombard you with offers.

I always get phone calls and direct mail offers from my credit card provider – MBNA Canada – trying to get me to sign up for something new.  These products are never a good idea.  I prefer to use my Smart Cash card, collect cash back, then pay off the balance in full.  I don’t want to pay a dime to my credit card company, in interest or for any other fees.

Here are three credit card products you should avoid:

Identity Theft Protection

One sales pitch I hear on a regular basis is for credit alert monitoring that helps protect against identity theft.  The service costs $17.99 per month and includes online access to your credit report and credit score from Equifax Canada.

It also proactively monitors, manages and protects your credit and identity information and can detect early signs of fraudulent activity.

Related: Choose Your Rewards Card Carefully

Yet, according to my credit card agreement, I’m already covered.  If a fraudulent charge appears on my statement I won’t be held responsible for any unauthorized use of my card, PIN or account number.

Balance Protection Insurance

Another sales pitch that I get from my credit card issuer is about balance protection insurance.

For $0.99 per $100 of the average daily balance you can protect your credit rating in case of unexpected job loss or disability and can ease the burden on your family in the event of my death.

This means you’ll pay nearly $20 per month if you carry a $2,000 balance from month-to-month.  Not a good deal.

Access Cheques

My credit card company is always sending me access cheques to arrange a balance transfer or deposit.  The marketing material suggests I can use the access cheques for many things, including:

  • Visiting friends and family – create some memories that will last a lifetime
  • Holiday shopping – the people you care about deserve the best
  • Planning a summer getaway – you work hard; treat yourself and your family to a holiday

Related: Do You Put Groceries On Your Credit Card?

A quick glance at the fine print tells me this is a terrible idea for consumers.

The annual interest rate for access cheque balances is 19.99 per cent, and the transaction fee for access cheques is one per cent of each transaction amount, with a minimum fee of $7.50.

When used responsibly, credit cards are a great financial tool that help people budget effectively, manage their cash-flow, and earn rewards.  Just make sure you don’t fall into the credit trap.  Pay off your balance each month and don’t get sucked in by credit card companies and their aggressive sales pitches.

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