You need some expensive medical care yet don't have the insurance or money to pay for it. Should you use a medical credit card that's pitched at some doctors' offices?
A new report by the nonprofit Consumer Action warns that some of these cards can be unhealthy for your finances. They usually offer a zero percent introductory rate, though after that period, card terms can vary greatly. The problem is that these terms often are difficult to uncover. So patients unwittingly can end up owing a lot more by running afoul of the terms, the San Francisco-based nonprofit said.
"In some cases, the information was buried, or hidden or not available," says Ruth Susswein, Consumer Action's deputy director of national priorities. "How is a consumer to know upfront what they might be required to pay?"
Usually, if consumers can't afford a procedure, they postpone treatment or work out a payment plan with the doctor. Medical credit cards - often available at the offices of dentists and veterinarians - allow consumers to put the cost of treatment on plastic and pay the doctor immediately, something medical professionals like.
Consumer Action looked at seven medical credit cards that offered a zero percent interest rate during a promotional period lasting from six months to several years. Three of those cards offered "deferred interest," which have the potential to cause the most damage to consumers, Susswein says.
These cards accrue interest, but if consumers pay off their balance within the promotional period, they don't pay the interest. If they miss this deadline, they will owe interest -- at an annual rate of up to 28.99 percent -- going back to the original purchase date, according to Consumer Action.
GE Capital's CareCredit was among the cards in the Consumer Action survey that featured deferred interest. Late last year, the Consumer Financial Protection Bureau ordered GE Capital Retail Bank and CareCredit to return $34.1 million to more than 1 million consumers who received misinformation or poor disclosures about the cards from doctors' offices. Consumers who thought they signed up for an interest-free card instead were charged interest at an annual rate of 26.99 percent, the CFPB said.
Not all cards carry such severe consequences, Consumer Action found. Some won't charge interest for years if consumers maintain payments. They also won't report a missed payment or two to credit agencies. These cards, though, can only be used at certain hospitals within a geographic location so most consumers won't be eligible, Susswein says.
For instance, AccessOne MedCard offers zero percent interest from 12 months to more than eight years. If a payment is missed, the annual rate goes up to 9.25 percent. The card is only available to patients receiving care at affiliated hospitals in five southern states.
The use of medical credit cards is likely to grow as consumers become more responsible for paying for their health care and opt for higher deductibles to keep premium costs down, Susswein says.
Before turning to a medical credit card, explore all your options, including an interest-free payment plan with your doctor, Susswein says. Most hospitals also have charitable funds to help low-income patients with expenses, she says.
Some consumers might find it cheaper to use a regular credit card with a zero percent introductory rate than a medical credit card, Susswein says. At least if you don't pay off the balance before the introductory rate expires on a regular card, you will owe interest only on the remaining balance -- not on the entire original bill.
If you do sign up for a deferred-interest medical credit card, make sure you have the resources and the discipline to pay off the balance within the time limit, she says.
And never pay for services in advance with a medical credit card, Susswein says. If you don't go through with a procedure, you might find it difficult to get a full refund if the doctor ordered materials for your treatment ahead of time, she says.
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