The CreditCare Disaster

[AssistanceRequired]

Ok, the new account has posted and resulted in a -25. This account has posted as a credit card not as an installment loan and it increases my util.  It is a 6 year loan, that I pay $100 a month w/ 11.90% apr.

Which would you agree to be my best course of action?

a. Pay the loan off in the next few months and forget my fatal error

b. Based on the terms, try to get the company (GM) to list it as an installmant

As usual, your wisdom and insight are appreciated.

Thank you so much.

AssistanceRequired

[Anonymous]

Are you talking about the GEMB CareCredit card?

That is a credit card. It is not an installment loan, because you can go back and reuse the card as you pay it down. An installment loan would not leave credit available as you paid it down. The contract is fairly clear.

What happens is you apply for the credit card, and it arrives with the amount you used for the medical procedure already debited against the card. For example, I needed my wisdom teeth out, which cost $952. CareCredit offered me a $1000 credit line. I took it, and got my wisdom teeth out. A few weeks later, got the actual card in the mail with $48 of credit still available, and pmts of $22/mo. I've paid it down to $300 and now have $700 available for unexpected medical expenses.

It will be in your best interest to pay it down as quickly as possible though. Your score probably dropped because it is likely near the max, since they usually offer you a CL that is just a few dollars more than your procedure cost. Also, if you only pay the min due, you will usually NOT have the card paid off by the end of the introductory period, leaving you with the default rate applied to the ENTIRE past balance. My intro was 0% for 10 months, and only $28/mo min payment. But with a $952 balance, obviously I would have been left with a big boo-boo once the 10 months passed and the rate defaulted to 19-30% APR.

Once you pay it down, you'll likely see your score rise quite quickly.

[Anonymous]

Yes it is a credit card...I used mine for Lasik 1 year interest free, but it had a balloon payment if not paid by the 1 year time limit.

They don't flat out tell you its a Credit Card. The surprise for me was when it showed up in the mail. When they discuss the terms the average person would expect it to be an installment loan. Then Surprise!

If you are worried about your credit score then I would suggest paying it off early as soon as possible and keep the credit card open after it's paid off.

[AssistanceRequired]

I am so very angry w/ myself.  It is the GEM CreditCare and I feel completely mislead.  I will focus all my attention on paying it off ASAP. 

I was approved on 6/5 and Fico has my statement date as 6/11 w/ a $2 overbalance.

Do I detect lending predator?  I am so grateful that I am in a position to pay if off in the next few months.

As always, I thank you so very much. 

[Anonymous]

Well, look on the bright side: you now have another tradeline in good standing. You just need to get the uti down. After you do that, even if they do ratejack you to 28%, just buy a cheeseburger every other month or so to keep it active. Make them spend more money maintaining your account than they take from you in interest.

[RobertEG]

If it is not credit granted by contract based upon a fixed initial loan balance, with fixed regular (installment) payments (classic def of an installment loan), then it dont quack like an installment duck.

Once you are given flexitbility to alter payements and/or balances, they are extending to you the opportunity to manage the debt in a manner that revolves around your discretion.  This is the classic, and broad, def of a "revolving" line of credit.

I dont know whether it could be classified as a "credit card.".  But it aint an installment loan.  It appears, from what you have said, to be legitimately classified as a revolving account.

Message Edited by RobertEG on 06-16-2008 10:39 PM

[RobertEG]

AssistanceRequired, the first thing I would do is to address the late pay that you referenced.  If they think you did not make full payment when due, then you are facing a major FICO late pay report.  I would get on the phone today to the creditor, and explain your misunderstanding, and ask them not to report the late pay to the CRAs.  Dont wait for it to post, and see if they do it, talk to them NOW!

[AssistanceRequired]

I applied for the account and was accepted 6/6.  I asked for the exact amount needed to cover my procedure.  The facility debit the account on 6/11; which also happened to be the statement date.  Resulting in $2.93 over balance.  My Fico balance is $4,502.93, but it does not indicate over the balance, because GEM said that is a finance charge, not an over the limit charge. Whatever...  I imagine my scores will suffer before they begin to get better. My apr is 11.90%, which will not be too difficult to manage once I pay down 80% of the balance and reduce my util.

I should have done my homework, I should have posted the terms here before I applied, but I didn't.  I will have to put moving and furniture on hold for a few months, because I am really concerned about what this account can do to my history. 

I am not 2 years out of BK and the belief is that once someone has filed for BK they are prone to end up in debt again.  I will not be a statistic. 

I am so grateful that I have this place to come and express my concerns and read your experiences, opinions and suggestions. 

Credit is not something you can discuss with friends and family.

Thank you all for your candor and openiness.

AssistanceRequested

[BungalowMo]

Hi Assistance.... I have that card too.  I got it when my cats needed work done at the vet. 

If I were you, I would take maybe 5 or 6 mos to pay that off & that will start rebuilding your payment history.  They like to see a balance, they several mos of pay, pay, pay.  Hang on to that card too.  Don't close it, as you may need it again.  While it is a credit card, it's only for medical "things" and only accepted at certain places.  It worked at my vet, but not at my dentist.

Either way, it's a step toward rebuilding your credit history.  It sounds like you're on the right track... and determined to break that statistical cycle.  Good for you!