Patrice Schultz of Gulf Port, Miss., planned to undergo major
dental work this spring when her dentist's office asked about her
"I said it was fine," she recalls. "The next thing I knew I had
a credit card in the mail with a $5,000 balance on it."
Schultz had assumed the dentist's office asked about her credit
to set up a payment plan, and she doesn't recall signing a credit
card application. Nevertheless she began making payments on a GE
Money CareCredit card at 14.9 percent interest, even though not all
the dental work has been completed. She trusts her dentist, but
says, "I should have asked better questions when all this took
Such scenarios are raising concerns about the promotion of
medical credit cards. Patients use the accounts to charge
out-of-pocket medical expenses that aren't covered by their
health insurance plans
, and they can sign up for them in their doctors' offices.
Convenient? Sure, but consumer advocates worry the cards will
lead patients into debt they can't afford.
Putting medical bills out of reach
"They may be good for people who have the resources to pay their
bills," says Mark Rukavina, executive director of The Access
Project, a nonprofit health care advocacy group in Boston. "But for
people who are strapped, it may make medical bills even more out of
Consumers charge less than 20 percent, or $45 billion, of their
out-of-pocket health care expenses on credit cards, according to a
McKinsey & Co. 2007 report. But with the right business models,
the firm has predicted that credit card spending on health care
could reach $150 billion by 2015.
Big lenders, such as JP Morgan Chase, Citigroup and GE Money,
now pitch medical credit cards or credit lines to consumers as a
way to spread out payments and keep health care expenses separate
from other spending. By making the cards available to patients,
doctors and dentists can focus on their medical practices rather
than collections. They also can eliminate the risk of financing
patient payments and get paid for their services within two to
three business days, the Citi Health Card website says. The
card features a low merchant fee compared to other patient
A growing number of complaints about medical credit cards
prompted then-New York Attorney General Andrew Cuomo to investigate
the industry in August 2010.
Some consumers reported their health care providers told them
the credit cards had 0 percent interest, but once the no-interest
promotional periods ended they were charged interest of 25 percent
or more retroactively if they hadn't paid off the balances. Others
complained they were charged upfront for services they never
received and ran into roadblocks when they tried to get
In addition, his office found that some health care providers
pressured consumers into using GE Money's CareCredit, which paid
kickbacks in the form of rebates on merchant fees to doctors and
other providers, based on how much was charged on the cards.
The New York Attorney General's Office website now warns
consumers to beware of medical credit cards and features a
health care credit card calculator
and a list of tips for patients.
Minnesota Attorney General Lori Swanson sued two chiropractic
practices in 2009 for allegedly signing up patients for the cards
and placing charges on the accounts without their permission.
Spokespeople for CareCredit and Citi Health did not respond to
interview requests. Chase spokesperson Gail Hurdis says
ChaseHealthAdvance offers financing for a broad range of elective
medical procedures, including orthodontia, vision correction and
"We provide simple, easy-to-understand product terms and
disclosures," she says. "Our goal is to make sure that nothing
catches a patient or the practice by surprise during the financing
Who benefits most?
Gail Cunningham, vice president for public relations of the
National Foundation for Credit Counseling, says providers are
motivated to offer the credit cards to consumers because it moves
the debt off their books.
"That's why consumers come under so much pressure," she
If your health care provider offers medical credit cards, follow
these tips to stay out of debt:
Read the terms and conditions.
Make sure you understand how promotional interest rates work. If
you miss a payment or do not pay the bill in full during the
promotional period, a hefty interest rate may apply retroactively
to the entire amount charged on the card. Don't agree to any
charges on a credit card until you've thoroughly reviewed your
medical bill, Cunningham says.
Consider other payment options
. Shop around and compare the financing terms with other credit
cards, ask about financial assistance programs or see if your
provider will set up a payment plan for you. "Unless they're at
risk of losing life or limb or are quite certain they'll be able to
pay a bill, we recommend against using plastic to pay for health
care," Rukavina says.
Weigh the impact on your credit rating.
Medical credit cards can ding your credit score, Cunningham says.
Often the credit limit on a medical credit card is the same amount
the provider charges for a service, so the card is maxed out
immediately. The percentage of available credit you have is a
factor in your credit score. Experts generally advise keeping your
credit card balances below 30 percent of your credit limits in
order to optimize your score.
Schultz isn't thrilled with her medical credit card, but she is
making sure that she pays her bills on time. "You have to be really
careful because if you're late, there's a fee of $35 and the
interest rate goes up to 29.9 percent," she says.