Ok, so I bought something and got the 2 years interest free deal. Seemed like a good idea since I needed the product and I didn’t have insurance to cover it at the time and was fairly strapped for cash.
This was my first (and probably last) time buying anything on financing so I admit I was probably naive.
So my payments are a measly $15 a month… no problem, right. My first payment (made the very day I got the item) was for $100. I called to make sure it was processed, and it was. Still no problem.
Then I got a statement in the mail and a credit card?! I didn’t want a credit card so I called the financing company and asked why I got a credit card and was told “You don’t need to use it if you don’t want to but you have an account with us now for financing and that makes you eligible for a credit card”.
I told her I would be cutting up the card and that I didn’t want to have a credit card with them at all and that I just wanted to pay off my item ASAP. I even checked again that my $100 payment was there and said, “So that payment covers 6 months, right?” and she said, “You are paid up until the end of July”.
Fine and dandy, I got a couple monthly statements and wasn’t too worried then 3 months after the first payment I put another $75 on. Now that’s $175 over 3 months or a total of 11 months (plus change) worth of payments.
Wrongo!!!! I just recieved a letter NOT from the financing company but from the credit card company company who tells me that they will be closing my account on Friday due to non-payment. I called and found out the following things.
1. The credit cards provider and financing company are the same they just go by different names.
2. As soon as I made my first payment they transferred the balance on the financing onto a Visa card.
3. They have marked my credit report as non-payment because I didn’t pay a minimum balance on my credit card each month (just all at once).
4. They also claim that they didn’t get the $75 payment even though I have a confirmation number and my bank shows that they in fact have received the payment
Now I’m afraid my credit is ruined and the only solution they gave me is pay the balance by Friday and they won’t close my account but the mark on my credit report will remain.
They also agreed that even if I make a payment online RIGHT NOW it may not actually get to them by Friday morning and there’s nothing they can do about that.
I was actually hoping to have almost all of my debt paid of by the end of this year so I can start looking for a house next year and I don’t want any bad marks on my credit.
I even called and told them that I never activated the credit card (like it said I had to in the letter) and I told them I didn’t want it but they don’t care.
I looked at my account statements and it says nothing on them at all about a credit card… only financing.
I know some of you are probably thinking I’m an idiot to fall for this and I wouldn’t disagree but I thought I was doing OK and now I feel like the $30,000 in debt I paid off in the last 5 years means nothing because of this stupid mistake. —No More Credit
This article appears in Jun 17-23, 2010.
holy shit, i just get in the door, and this big fucking booking is now staring me in the face. i’ll pass on this shit, thank you.
A couple of points from someone who has worked in the retail and banking industry:
If you buy something on an X month equal payment plan, any payments you make over the actual monthly payment do not (and never have) go towards the next month’s payment. They always apply against the principal. So, what you were doing was in fact applying money against the purchase, and lowering the amount of time needed to pay it off. It’s just like a loan, and is an important lesson for you; this is exactly how a mortgage works.
Any financing that you have through a retailer is provided by a credit card. They don’t do loans. An I-9 on your credit report is just as bad as a R-9 (these are the ratings used by the credit reporting agencies), so whether you have a credit card or not is no matter.
If you’re worried this this one issue will destroy your credit, well, it won’t do it any good, but, it won’t destroy any good credit. Besides, there are varying levels of “bad” credit. You’d need to have consecutive months of non-payment for it to be irreparable.
I’d suggest you talk to a manager at the credit company. This way you can ensure that you are getting a straight answer. I’d also suggest that you talk to both Equifax and TransUnion. These companies are the credit reporting agencies that operate in Canada. Not only can you get a copy of your credit report, they can talk to you about your credit.
If you don’t know how financing and loans work, you shouldn’t be borrowing.
well I think Fever summed that up nicely.
why did you think your payments over the minimum were going to future months?
that’s just odd and would be a pain in the ass for the lenders to calculate.
ideally, (hindsight is 20/20) you should have payed the minimum and kept the remainder in a jar or account until the next payment is due.
That’s the same with any loan you take out.