Is CareCredit a predatory scam?

An unexpected accusation in her testimony led one woman to call CareCredit a predatory scam. The TikToker, who goes by localandvocal (@localandvocal), shared a video recounting her recent experience with CareCredit that resulted in her being unable to make the minimum payment. Since its release on September 16, the video has gone viral and has been viewed over 584,000 times.

Localandvocal begins their video with a bold accusation. “CareCredit is a scam [and] Not enough people talk about it, so let me explain to you how they will do it [expletive] You like her [expletive] “I use a bag of sand as lubricant,” she explained.

In her nearly seven-minute TikTok, localandvocal shares how a visit to the dentist revealed the need for an expensive procedure. Since she couldn’t bear the costs herself, she used CareCredit’s financing service on the recommendation of the dentist’s office.

“Once approved, I am informed that I will receive a 12-month introductory interest rate of 0% APR. Cool beans, so I’m signing up for the card. I get the procedure, I pay for it like this. “I think I’ll at least pay it off and then just have to pay interest on the balance because that’s how it works. That’s how it’s always worked,” she explained.

That’s what she thought – until she received her final statement from CareCredit.

“One day I get a statement and my account balance is hundreds of dollars higher. My first reaction is that someone stole mine [expletive] identity [because] I haven’t used this card for anything, but when I look at the statement I see this [the] “An increase of hundreds of dollars is in the interest,” she continued.

She searched for answers, but found even more confusion

Confused, she decided to call CareCredit. Although the answer didn’t provide any additional clarity, one thing became clear to her. She’s in trouble.

“I finally called someone and asked them, ‘I’ve suddenly been charged hundreds of dollars in interest.’ Are you going to charge me for everything I paid off in addition to the balance?’” she said in disbelief.

I repeated my question and then he did [told] I told myself my interest rate was 27%. That’s when it really, really became clear to me. Oh, I see [expletive] right now,” she continued.

After some back and forth, she finally got the answer she was looking for. It was far from what she wanted to hear.

“Then he finally says, ‘Oh no, we’re charging you interest on everything you’ve already paid off.’ I’m sorry ma’am, but please note that this is only a one-time fee.’ I couldn’t pay off this one-time charge of almost $600 in interest, so now my balance has basically increased by $600. I can no longer afford the minimum payment and my minimum payment is almost $160, 96 of which – 95 and change – is interest, not principal.”

Localandvocal ends their video with a warning for those considering CareCredit: “If you don’t have the money for a procedure you need or a procedure your pet needs, CareCredit may be your only option, but I am here to tell you.” This [it] does not work like a normal credit card. I think it’s similar to predatory lending, and that’s one of the reasons why […] it is like that [expletive] It’s expensive to be poor in America.”

What is CareCredit?

CareCredit, issued by Synchrony Bank, offers promotional financing for out-of-pocket healthcare services, including dental, cosmetic, vision and veterinary care.

CareCredit offers two main types of promotional financing: reduced APR financing and deferred interest financing. Financing with a reduced effective annual interest rate is uncomplicated. It requires borrowers to make fixed monthly payments at a lower interest rate until they pay off the balance in full. In contrast, deferred interest financing can be more complex.

With deferred interest financing, borrowers can avoid interest on the principal amount if they pay off the entire balance within a specified period of time – typically six, 12, 18 or 24 months. This can be confusing as it is similar to a 0% introductory offer. Although lenders often market both types of financing similarly, they are not the same. Under a deferred interest plan, if the borrower does not pay the principal balance in full by the end of the promotional period, the lender will retroactively apply any accrued interest from the beginning of the balance.

Is CareCredit a predatory scam?

CareCredit has been investigated in the past for practices that were considered “fraudulent.” In December 2013, the Consumer Financial Protection Bureau (CFPB) ordered Synchrony Bank (then known as GE Capital Bank until 2014) and its subsidiary CareCredit to refund up to $34.1 million to consumers affected by its tactics . According to the CFPB, many consumers who signed up for the credit card received inadequate explanations about the terms and conditions. This led them to believe that they were signing up for interest-free CareCredit cards. In fact, interest will accrue on the entire remaining balance if it is not paid by the end of the promotional period.

Recently, CareCredit came under renewed scrutiny from lawmakers who called on the CFPB to crack down on medical credit cards. During a Senate committee hearing in April 2023, senators criticized deferred interest plans that resulted in consumers paying high interest rates. The office acknowledged these concerns in a May report. However, the CFPB has not taken any further action against medical credit card companies.

Pushback against “predatory” claims was swift

The comments section quickly filled with people who disagreed with localandvocal’s characterization of CareCredit as a “predatory scam.” Many pointed out the fine print. If the remaining balance is not paid by the end of the promotional period, interest will accrue on the entire amount.

“No 0% adoption rate works like that. Interest will be charged on the original balance until the purchase date if not paid in full,” one commenter wrote.

“That’s not how it works. Read the fine print. […]“The entire balance must be paid or you will owe interest on the entire balance,” another replied.

“You didn’t really know how it worked, but that’s not due to care credit, is it?” someone asked.

“Care loans have always been like this. We use care loans frequently [and] “I always knew that if it wasn’t paid in full on time, the entire interest would be owed, so we’re paying it in full on time,” another commenter added.

CareCredit responds to allegations of robbery fraud

When Daily Dot reached out to CareCredit, they gave the following response:

“Health care is becoming increasingly expensive and insurance doesn’t always cover the care people want. For more than 35 years, CareCredit’s convenient and transparent financing options have helped consumers access the health and wellness products and treatments they want as part of their health journey. We provide consumers with a number of clear and conspicuous disclosures as part of the application process [helps] Consumers understand what deferred interest is, their individual payment terms and how long the promotional period lasts.”

@localandvocal that’s something 🐴💩 #poverty #viral #carecredit ♬ Original sound – LocalAndVocal

In response to localandvocal’s allegations that it was a predatory scam, they added: “In addition to the disclosures, each cardholder will receive a welcome call from CareCredit to provide further details on how the credit card works and promotional financing options.” CareCredit cardholders receive clearly indicate on their bank statements how much they must pay by when and how much they would owe – including interest – if they did not pay in full by the end of the promotional period. Our customer service team is available to address any questions or concerns our cardholders may have and we encourage the content creator to contact our team at the number on the back of their card.”

We also reached out to the TikTok account localandvocal in the comments but did not receive a response.