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Credit card companies pushing services to recoup Dodd-Frank losses

John UlzheimerCredit card companies have begun to increase their marketing of services like credit monitoring, credit insurance, identity theft protection and other add-on products.
 
The emphasis on these add-on services may reflect that credit card companies are looking for ways to recoup profits lost from their businesses after new regulations that have tightened regulations on fees and interest rates in the last few years, the Associated Press reports.
 
While none of the products are new, they are very profitable for the credit agencies themselves.
 
"Step one is to not get into so much debt that you can't pay it off every month," John Ulzheimer, the president of consumer education at SmartCredit.com, said, according to the AP.
 
For those who have already incurred a large balance, services such as credit card insurance should be considered carefully. Insurance offered on cards issued by Citibank charge 87 cents per $100 of each month's balance. This would be equal to a fee of $17.40 for a balance of $2,000.
 
"If you took that amount of money and threw it into the balance, you could get out of debt that much faster," Ulzheimer said, according to the AP. "If you never have to file a claim under the service, you're actually getting into more credit card debt because of it."
 
The policies promise to cover payments for a certain period of time if the card user is ill, hurt, loses a job or has another reason to skip making payments, including military service. There are some restrictions on the policies and a consumer might have to be out of work for more than 60 days before a claim can be filed. Identity theft policies have certain restrictions as well, such as only claiming one identity theft incident per year. The services don't actually protect users from having their identity stolen, they can only monitor credit reports and let customers know if an application for new credit has been made.
 
"They're very reactive," Ulzheimer said, according to the AP. "The monitoring services don't let you know until something has happened. It's like getting in a car accident and someone coming up and telling you you've been in a car accident."

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