Confusion over payment protection insurance - 10/09/2008

Over a million people have taken out payment protection insurance (PPI) on their credit cards under the mistaken assumption it will help their application, it has been claimed.

Around 9.8 million credit card holders currently have PPI - of these, 13 per cent wrongly thought it would improve their chances of being accepted, according to a study from Which?, the consumer body.

Personal finance campaigner Doug Taylor commented: "As the credit crunch continues to take hold, people want to be protected and have peace of mind."

However, he encouraged people to seek independent financial advice about protecting their finances.

The PPI sector creates around £970 million a year for the industry and credit card PPI accounts for approximately 22 per cent of the market.

In June, a provisional report from the Competition Commission found that PPI customers were overcharged by more than £1.4 billion a year.

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