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10 financing options for cosmetic surgery

Getting a makeover isn't cheap -- so how do you pay for it?

By Emma Johnson

Most of life's costlier occasions have prescribed financing options: buy a home, get a mortgage; send a kid to college, save in a 529 plan or get student loans; need a new car, sign a lease or take out a car loan.

But what do you do if you want cosmetic surgery? In 2011, 13.8 million people underwent a cosmetic procedure in the U.S. -- a figure that is up 5 percent over 2010, and which cost patients a whopping $10.4 billion, according to the American Society of Plastic Surgeons (ASPS).

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Plastic surgery's high cost is enough to furrow anyone's brow. Here are 10 major choices for paying, and the pros and cons of each:

1. Health care or medical credit card.
2. Regular credit card.
3. Bank loan.
4. Home equity loan/line of credit.
5. Cash savings.
6. Unsecured medical loan.
7. Doctor payment plan.
8. 401(k) loan.
9. Loans from friends, family.
10. Gifts.

Break it down, and the figures are steep. ASPS reports that breast augmentation costs almost $3,400, nose jobs $4,400 and facelifts $6,400 (not including surgical facilities, anesthesia and other fees, which can add thousands more to the final bill).

And insurance doesn't typically pitch in to help. "Consumers should be aware that cosmetic surgery is not covered under insurance, so all of the expenses must be paid out of pocket," says Kevin Kautzmann, a New York City certified financial planner. Only in rare instances, such as reconstructive surgery after an illness or accident, will insurance cover the costs.

So what are your payment options?

Consider Kathy Riffey, a Baltimore medical insurance analyst who recently lost 40 pounds. The resulting saggy skin caused her to seek a breast lift and implants, and she did not have $8,000 saved to pay for the plastic surgery procedures.

With the aid of her plastic surgeon's finance office, she chose one of the medical credit cards on the market. With an introductory 0 percent interest rate for six months, followed by a moderate rate hike, Riffey opted for a 24-month plan, for which the bill is just $167 per month. "It was a lower interest rate than a credit card with better payment plan options," she says. "And, as I pay it off, I can use the remaining credit for braces, which I plan to get."

If you are considering plastic surgery, here are some payment methods to explore:

1. Health care or medical credit cards
Medical credit cards are the latest wrinkle in borrowing for beauty, according to a July 16, 2011, article in the Wall Street Journal. Business is booming for the cards, which only cover medical expenses and are often offered as a financing option to cosmetic surgery patients.

Pros: Health care credit cards often come with attractive 0 percent promotions, and some can have reasonable interest rates and payment plans. Since they are limited to medical expenses, they can lend "a sense of control if you tend to overspend" on regular credit cards, says Billy DeFrance, an El Paso, Texas, certified financial planner.

10 financing options for cosmetic surgery

Cons: There has been a spate of predatory lending allegations against health care card lenders, as well as lawsuits against medical providers who signed unknowing patients up for the cards. Sometimes the cards were marketed as having no interest, or the interest was applied retroactively to the entire balance rather than the remaining balance if a payment was missed or not paid off during the 0 percent introductory period. Also, medical providers may have received commissions from the card issuers for new cardholders or charged procedures to a patient's card before they were performed. And if you miss a payment, the default APR can rise to 30 percent in some cases.

Advice: Research the card and read the fine print. Do not pay for multiple procedures upfront -- such as a series of Botox injections -- but insist on paying as you go. "A surgeon's job is not to determine whether a patient can afford the procedures, but rather to communicate whether the procedures can achieve the patient's goals," says Dr. Ariel Rad, director of aesthetic plastic surgery at Johns Hopkins School of Medicine in Baltimore. "Patients should to take a step back after the consultation and ask: 'What procedures do I really want or need?' and 'What amount can I really afford?'"

2. Regular credit cards
You can use an existing low-APR credit card or apply for a new card with a 0 percent introductory period to pay for the procedure(s).

Pros: Assuming the card has a reasonable interest rate, this can be an affordable way to pay for the surgery while you maintain or even build your credit. Plus, you can rack up cash back if the card offers it.

Cons: A large purchase such as cosmetic surgery can tie up your credit line and reduce your credit utilization ratio (which may lower your credit score) while you pay it off.  If you can't afford to pay it off promptly, you may need a second facelift before you've paid off the first.

Advice: Don't pay more than 10 percent interest, Kautzmann says. Don't add other purchases to the balance. Pay the balance off before the introductory rate expires, and don't charge more than 30 percent of your available credit.

Patients should to take a step back after the consultation and ask: 'What procedures do I really want or need?' and 'what amount can I really afford?

-- Dr. Ariel Rad
Johns Hopkins School of Medicine

3. Bank loan
Another option: A personal loan from your local bank or credit union.

Pros: While the interest rates of an unsecured loan from a financial institution run close to those on credit cards (depending on your creditworthiness and ability to qualify, of course), bank loans have fixed interest rates and a fixed amount of time in which to repay. Plus, if you've never taken out a personal loan before, it can boost your credit rating (by showing a variety of types of loans you've repaid) -- provided you make the payments on time until the repayment term is complete. And, unlike a credit card, you can't add more to the balance.

Cons: Unsecured loan interest rates can add quite a bit to the final cost (in interest charges) of your elective procedure. As of July 19, 2011, rates vary from 5.42 percent to a high of 23.37 percent, with an average of 11.43 percent (see today's personal loan rates).

Advice: For a lower interest rate, you may want to ask about a secured loan (where you offer up collateral against the loan, such as a car or house), although if you end up being unable to make the payments, you risk losing that property.

4. Home equity loans and lines of credit
These are loans against the equity of your house, with interest based on current mortgage rates.

Pros: Can be easily accessible for homeowners and affordable now that mortgage rates are at historic lows. Interest is tax-deductible for most people.  

Cons: The volatile housing and job market means that you could be left holding your hat should you be forced to sell your home -- or if interest rates take an unexpected jump.

It may not be sexy, but the best answer for most people is to save each month until you have the bill covered -- then get the procedure done.

-- Michael Masiello
Financial adviser
Advice: "Using a home equity loan can get people into financial trouble," says New Jersey certified financial planner John Egan. "However, some of our clients have used a home equity loan for plastic surgery because the interest rates are very low -- but as a last resort."

5. Cash savings
Money in the bank, not earmarked for emergencies.

Pros: You don't have to borrow or pay interest.

Cons: Your savings decrease.

Advice:  "It may not be sexy, but the best answer for most people is to save each month until you have the bill covered -- then get the procedure done," says Rochester financial adviser Michael Masiello. "We as a society, at every level, have to get off the merry-go-round of immediate gratification spending because we want it, regardless of whether we can afford it."

6. Unsecured medical loans
These loans, which can come in the form of personal loans or credit cards, and are often brokered through third parties, such as doctors or brokers.

Pros: If you have a low credit score and have trouble finding other sources of financing, this can be a viable option.

Cons: Interest rates tend to be high or can balloon after an attractive introductory offer. If you have a co-signer and default on the loan, that person's credit will be damaged -- not to mention the hit your relationship may suffer.

Advice: If you choose this route, websites such as MyMedicalLoan.com and eFinancing-Solutions shop around for the best deal in exchange for a fee. As always, read the fine print, and consider whether financing cosmetic surgery at a high interest rate is truly within your financial goals.

Since [health care credit cards] are limited to medical expenses, they can lend a sense of control if you tend to overspend on regular credit cards.

-- Billy DeFrance
Financial planner
7. Doctor payment plans
Some doctors will work with patients to create a payment plan that works with their budgets, although most require payment in full prior to the surgery.

Pros: These plans usually don't include interest. Doctor's offices that do offer financing typically have the flexibility to create a plan that works for each patient. Missed or late payments probably won't show up on your credit score.

Cons: Unpaid loans can still go to a collection agency. Failure to pay could affect your relationship with the doctor if you need or want future procedures.

8. 401(k) loans
Most 401(k) accounts allow participants to borrow up to 50 percent of the vested balance up to a maximum of $50,000. Repayments are automatically deducted from your paycheck over a period of up to five years.

If you have had or are considering cosmetic surgery, what method of payment did you or would you use?

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Pros: Easy, quick, no impact on your credit rating, low interest rates (in addition to a modest origination fee). You pay yourself the interest -- not a credit card or bank.

Cons: You repay the loan with taxed money, creating a situation in which you pay double taxes since you will pay taxes when you eventually withdraw the money in retirement. If your plan doesn't allow you to make contributions while you're paying off the loan, you lose out on tax benefits and asset growth for the repayment period. If you leave your job for any reason before the loan has been repaid, you must repay the 401(k) loan or else it is reported as taxable income. Plus, if you are younger than 59 1/2 years old and leave your job, you suffer an additional 10 percent penalty. "Depending on your tax bracket, you could stand to lose up to 45 percent of the loan balance to federal income tax or more if there is state income tax," says New York City financial planner Jeffrey Woolf.

9. Loans from family and friends
Got a relative with plenty of dough? What about a friend who just came into some money? Borrowing from friends and family can be tempting. Consider a site such as LendingKarma.com to track and document the exchange.

Pros: If you can't get credit elsewhere, it might be your only option. Terms can be excellent. Your loved one may be flexible should you make a late payment.

Cons: You will feel really bad if you default on the agreement. If you don't pay interest, the lender doesn't stand to benefit financially. It jeopardizes the relationship. Thanksgiving could be hell.

10. Gifts
Dr. Michelle Copeland, a New York City plastic surgeon, has seen patients receive gift certificates for procedures or set up funds through which loved ones can contribute money towards their surgery.

Pros: You get the gift you want (instead of that tacky holiday sweater or that crazy-expensive wine bottle opener you can't wait to regift). You don't have to come up with the money yourself. It doesn't affect your credit (which can be good or bad). Your request could rally emotional and social support for your pending surgery. 

Cons: You might be too embarrassed to ask. You might not get enough money. Your grandma could be horrified.

Advice: If you feel comfortable making this request, consider a reputable site like DepositAGift.com, MyRegistry.com, SmartyPig or GoGift.com where friends and family are more likely to feel secure depositing cash gifts electronically. Depending on your motivation, you could even launch a full-blown social media campaign to work towards your goal.

The advice for everyone considering optional cosmetic surgery applies: Consider what you can comfortably afford, shop around for the best financing and the best surgeon, read the fine print of any financing contracts you sign -- and think hard about whether lifting, tucking, trimming and snipping is really worth the drag on your bottom line.

See related: Medical credit cards: Watch for these warning signs, 15 tips for paying high medical bills, Health care cards carry same credit risks, Comparing health care credit options

Updated: December 3, 2012



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