They closed my care credit and Lowe’s account. Woman says CareCredit is a predatory scam. Here’s why

Photo by@localandvocal/TikTok CareCredit/Youtube fizkes/ShutterStock

'They terminated my care credit and Lowe's account... I've never skipped a payment'. An unexpected charge on her statement prompted one woman to call out CareCredit as a predatory scam. The TikToker who goes by localandvocal (@localandvocal) shared a video recounting her recent experience with CareCredit, which left her unable to make the minimum payment. Since its posting on Sept. 16, the video has gone viral, garnering over 584,000 views.

Localandvocal kicks off her video with a strong claim. "CareCredit is a fraud [and] hardly anyone discusses it, so let me break it down for you on how they'll rip you off like they did to me with a bag of sand as a lubricant," she stated.

In her nearly seven-minute TikTok, localandvocal talks about how a trip to the dentist revealed the necessity for a costly treatment. Faced with the inability to pay for it by herself, she turned to CareCredit's financing options after the dental clinic suggested it.

“When approved, I am told that I am gonna get a 12-month 0% APR introductory rate. Cool beans, so I sign up for the card. I get the procedure, I pay for it that way. I figure at least I’ll pay it down, and then I just have to pay interest on the balance because that’s how this works. That’s how this has always worked,” she explained.

That’s what she thought—until she received her latest statement from CareCredit.

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

She sought answers but found more confusion

Feeling puzzled, she chose to reach out to CareCredit. Even though the response didn't offer any more understanding, she soon realized one thing for certain. She's in a difficult situation.

“I finally got someone on the phone and I asked them, ‘I just had hundreds of dollars of interest charged to me all of a sudden. Are you charging me on like everything that I paid off in addition to the remaining balance?’” she said incredulously.

“I repeated my question and then he [told] me that my interest rate was 27%. That is when it really, really sank in. Oh, I’m getting [expletive] right now,” she continued.

After some additional questioning, she eventually received the response she had been seeking. It was quite different from the one she had hoped for.

“That’s when he finally says ‘Oh no, we do charge you interest on everything you’ve already paid off. I’m sorry ma’am but please know that it’s just a one-time charge.’ I couldn’t pay off that one-time charge of almost $600 in interest so basically my balance now has gone up 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 principle.”

Localandvocal ends her video with a warning for those considering CareCredit: “If you don’t have the money for a procedure that you need or a procedure that your pet needs, CareCredit might be your only option, but I’m here to tell you that [it] does not work like a regular credit card. It is, I think, along the same lines as a predatory loan and this is why one reason why […] it is so [expletive] expensive to be poor in America.”

What is CareCredit?

Synchrony Bank's CareCredit offers special financing for medical expenses not covered by insurance, such as dental, cosmetic, eye care, and pet care services.

CareCredit offers two main types of promotional financing: reduced APR financing and deferred-interest financing. APR financing is simple. It involves borrowers making consistent monthly payments at a reduced interest rate until they clear the entire debt. On the other hand, financing with deferred interest can be more complicated.

In deferred-interest loans, individuals can skip paying interest on the main amount if they settle the debt in full before the set deadline, which is usually six, 12, 18, or 24 months. This might be tricky because it looks a lot like a 0% introductory deal. Yet, although lenders usually promote both kinds of loans in a similar way, they differ in many aspects. With a deferred interest loan, if the borrower fails to settle the full amount by the loan's end date, the lender will add up all the interest that has accumulated since the loan began and apply it retroactively.

Is CareCredit a predatory scam?

In the past, CareCredit has come under fire for its tactics, which were deemed "misleading." In December 2013, the Consumer Financial Protection Bureau (CFPB) mandated Synchrony Bank (formerly known as GE Capital Bank until 2014) and its CareCredit division to reimburse up to $34.1 million to those impacted by its strategies. The CFPB found that numerous customers who applied for the credit card were not given clear explanations of the conditions. This led them to think they were signing up for credit cards with no interest. In actuality, the entire balance would accrue interest if not settled by the promotional period's end.

Lately, CareCredit has been under increased scrutiny from legislators, who have called on the CFPB to intervene regarding medical credit cards. During a Senate Committee hearing on April 2023, senators expressed their dissatisfaction with deferred interest schemes that resulted in consumers facing high interest rates. The bureau recognized these issues in a May report. Nonetheless, the CFPB has not pursued any legal action against companies offering medical credit cards.

The pushback against ‘predatory’ claims was swift

The comment section quickly filled with people who disagreed with localandvocal’s characterization of CareCredit as a “predatory scam.” Many pointed out that the fine print. Unless the balance is paid by the end of the promotional period, interest will be incurred on the entire amount.

“No 0% intro rate works like that. Interest is charged on the original amount back to the purchase date if not paid in full,” one commenter wrote.

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

“You didn’t really know how it worked, but that isn’t on care credit really is it?” someone questioned.

“Care credit has always been this way. We use care credit quite a bit [and] I have always known that the full interest would be owed if not paid in full on time, so we pay it in full on time,” another commenter added.

CareCredit responds to predatory scam allegations

When the NewsBreak reached out to CareCredit, they provided the following response:

“Healthcare is getting more and more 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 healthcare journey. We provide a variety of clear and conspicuous disclosures to consumers as part of the application process that [helps] consumers understand what deferred interest is, what their individual payment terms will be, as well as the length of the promotional period.”

In response to localandvocal’s allegations of being a predatory scam, they added, “In addition to disclosures, each cardholder receives a welcome call from CareCredit to provide further details on how the credit card and promotional financing options work. CareCredit cardholders receive clear reminders on their statements explaining how much they need to pay and by when, and what amount they would owe – including interest – if they do not pay in full by the end of the promotional period. Our customer service team is available to answer any questions or concerns our cardholders might have and we ask the content creator to reach out to our team by calling the number on the back of her card.”