Medical credit cards are the latest way patients fall deeper in health care debt, consumer advocates say

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Medical credit cards are putting patients in even worse financial conditions as health care debt grows in the United States, consumer advocates say.

But medical credit card supporters claim additional financing options help patients get vital and elective treatments. Now, physicians, patients, and financial companies are siding up for or against the payment method.

This year, the Consumer Financial Protection Bureau (CFPB), the U.S. Centers for Medicare & Medicaid Services (CMS), and the U.S. Department of Treasury (DOT) are requesting information about medical credit cards and other financial methods patients use to pay for health care.

“In particular, the agencies seek comment on whether these products may allow health care providers to operate outside of a broad range of patient and consumer protections,” said the federal regulators’ request for information.

Making patients pay more

That’s exactly what’s happening with “predatory terms and conditions,” according to Public Interest Research Group (PIRG) and its affiliate, U.S. PIRG Education Fund. They published the report, “A bad deal: Why you don’t want (medical credit) cards in your hand.”

Medical credit cards, issued by financial companies and promoted by physicians and other health care clinicians and staff, attract patients with deferred interest, allowing them to pay by installment for various medical services. But if patients miss payments or cannot pay the balance in full in a given time, interest rates spike and apply to the total charge for care. That costs patients more than if they simply paid using a regular credit card, according to PIRG.

From 2018 to 2020, patients paid $1 billion in deferred interest, based on using cards or loans to pay for almost $23 billion in health care costs for more than 17 million medical purchases, according to CFPB.

Who uses them?

Medical credit cards largely paid for elective procedures, but it appears that may be changing, according to CFPB.

This year, 14% of patients said they used the cards to pay for primary care services, according to “Health Care Plastic,” a report by the National Consumer Law Center (NCLC).

Dentistry is by far the largest market, with 94% of patients reporting use of medical credit cards. Top uses included cosmetic surgery (26%), veterinary care (26%), audiology (17%), and eye care (17%), the report said.

Medical credit card suppliers include companies such as CareCredit, a subsidiary of Synchrony Financial; Wells Fargo; and Comenity, a subsidiary of Bread Financial, according to CFPB.

“Available data, although limited, show significant growth in the medical payment product industry over the last several years,” said the federal agencies’ request for information. “For example, CareCredit grew from 4.4 million cardholders and 177,000 participating providers in 2013 to 11.7 million cardholders and over 250,000 participating health care providers in 2023.”

In the PIRG study, CareCredit/Synchrony held median debt of $1,443, the largest amount among the 10 most frequently reported health systems, in Oregon bankruptcy filings in 2019.

Medical credit card use is replacing the no- or low-cost payment plans that physicians and hospitals formerly offered, according to PIRG. Patients who may qualify for reduced-cost or free care through financial assistance or insurance, instead get stuck with medical credit cards or loans, according to CFPB, which this year published its own report, “Medical Credit Cards and Financing Plans.”

Using the credit cards also makes it more difficult for patients to challenge erroneous bills, according to CFPB.

Helping health

Leaders of the American Dental Association (ADA), the American Veterinary Medical Association (AVMA), the American Animal Hospital Association (AAHA), and CareCredit/Synchrony all sent comments to the federal regulators’ request for information.

“Credit expands consumer purchasing power,” and CareCredit is proud to offer deferred interest financing because consumers understand it and like it, said the response by Alberto B. Casellas, Synchrony Financial executive vice president and CEO, health and wellness.

ADA has endorsed CareCredit for years and about 115,000 dentists offer CareCredit to patients who save money on paying interest when they meet terms of their finance agreements, said the letter by ADA President George R. Shepley, DDS, and Executive Director Raymond A. Cohlmia, DDS.

“Above all, dentists are concerned with their patients’ well-being,” they said. “It is heartbreaking to see a patient’s reaction if they have a serious oral health condition and they wonder how they can pay for it even if they have dental insurance. When faced with the difficult decision of whether to forgo treatment or add the cost to existing credit card debt, CareCredit offers viable and reasonable patient financing.”

The federal request for information deals with human health and finances, but AVMA and AAHA noted pet owners like options to finance treatment for their dogs, cats, and other animals. When care is too costly, veterinarians frequently must do “economic euthanasia,” putting down family pets when owners cannot afford critical care, they said.