PLOC Questions

[ToxikPH]

I just got approved for a $2k PLOC this weekend and I'm not too sure how it all works. I was under the impression that it was like a credit card in the way you pay interest only after the due date if not paid in full. I just got home from the bank and they told me it gains interest instantly. Which way is true? I also can't find any fees associated with it as the credit union I applied from has a terrible website (www.ent.com).

[Anonymous]

Most all credit products other than credit cards accrue interest immediately.

[SouthJamaica]

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@ToxikPH wrote:

I just got approved for a $2k PLOC this weekend and I'm not too sure how it all works. I was under the impression that it was like a credit card in the way you pay interest only after the due date if not paid in full. I just got home from the bank and they told me it gains interest instantly. Which way is true? I also can't find any fees associated with it as the credit union I applied from has a terrible website (www.ent.com).

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You get charged interest as soon as you use it. There are usually no fees associated with it.

For FICO scoring it's treated like any other revolving account. So if you leave money in it you'll get hit with the utilization.

Usually it reports to credit bureaus the balance as of the last day of the month. PenFed is erratic, and in my experience has reported as soon as the 28th day of the month, and as late as the 7th day of the following month.

Some PLOC's are linked to your checking account as an overdraft LOC. Others are stand-alone accounts.

[BearsCubsOtters]

PLOCs are like credit cards in that they are revolving lines of credit. You are assigned a limit and you may borrow up to that limit. The available credit is replinished when the balance is paid down. Unlike a credit card, a PLOC does not typically come in the form of a card and is instead accessed by check, teller, or Internet funds transfer. 

The biggest difference between PLOCs and credit cards is that PLOCs do NOT come with a GRACE PERIOD. Credit cards typically provide the cardholder 20-25 days interest free use-provided that the prior month's balance was paid in full. With a PLOC, the interest is charged as soon as you draw the funds.

This is arguable, but the best way to use a PLOC is as overdraft protection for your checking account or to float payments until you receive your paycheck/government benefits/etc. This way the LOC is paid in full within a few days, costing only cents to a few dollars for the time you borrowed against it.