Do credit card companies have insurance against defaulters?
Sunday
Besides charging a higher interest rate to their good customers who are never late and other questionable practices, I heard they have insurance to protect them. True or False?
yes they do they have it just well a the banks all do for charged offs on debts
Categories: protect credit rating
Never heard that but it is a tax write off
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yes they do they have it just well a the banks all do for charged offs on debts
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yes it is called tax write off of bad loans.
we pay for it either way.
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biz owner
There is no such thing. We all pay because the banks have to cover make enough on the good customers to make up for the those that don't pay. Remember that when you are tempted to be sympathetic to someone who defaults; we all pay.
The closest thing is municipal bond insurance, which small government units buy because it is cheaper than paying a rating agency to rate them.
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False. But they assume certain default rates in their business models. That causes the non-deadbeats to pay higher interest than they otherwise would.
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False – there is no insurance for defaulted loans for financial institutions. There is FDIC & NCUSIF which insures deposits for the account holders should a financial institution go under. The institution has no protection what-so-ever.
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