CareCredit is expanding – should you consider it to finance medical costs?

Synchrony's medical card has a 26.99% standard APR and charges deferred interest

Fred O. Williams
Senior Reporter
Expert on consumer credit laws and regulations.

CareCredit is expanding: Is the medical card worth it?

Synchrony Bank's medical credit card CareCredit is expanding into more offices, including urgent care, as consumers face more out-of-pocket medical costs.

But with a standard APR of 26.99 percent, consumer advocates say people should find another way to pay.

"It's a pretty bad idea," said Chi Chi Wu, staff attorney for the National Consumer Law Center.

It is true that out-of-pocket medical costs are rising, she said, putting more pressure on finances. "That's not good for consumers," she said, "but putting it on a credit card makes it even worse."

For people with medical insurance, rising deductibles and out-of-network fees are increasing the health care financial burden. The Kaiser Family Foundation found that 1 out of 4 people covered by an employer's plan spent than $1,000 on medical bills in 2015 – and 12 percent paid more than $2,000.

CareCredit: Synchrony's medical card, at a glance

  • Locations accepted: 200,000
  • Standard APR: 26.99 percent
  • Average U.S. credit card APR: 16.99 percent
  • Settled regulatory complaint in 2013

See related: Instant credit: Convenience often comes at a price

Card targets new medical markets

“As rising health care costs shift the financial responsibility from traditional payers like insurers to consumers, it’s a natural progression for CareCredit to expand into new medical specialties and give even more patients access to care,” CareCredit CEO Dave Fasoli said in a statement.

CareCredit is offered by the store-card specialist Synchrony Bank. Its current base is in dental, optical, veterinary and cosmetic markets, which usually aren't covered by insurance. More than 200,000 locations around the country accept the card, CareCredit said, and 14,000 people apply for the card daily.

In the past 18 months, it has pushed into new specialties including urgent care and primary care, physical therapy, ambulatory surgery, durable medical equipment and gastroenterology.

It also launched a CareCredit Rewards Mastercard that builds up points for medical purchases. On internet message boards, some users of the plain vanilla card report being upgraded to the rewards card, which can be used for purchases outside of the medical sphere.

Medical providers face collection crunch

The company said the moves comes as medical providers face heightened concerns about patients being able to pay, with the time period to collect payments increasing.

A study cited by CareCredit projects that out-of-pocket spending will jump from $416 billion in 2014 to $608 billion by 2019. “[M]any patients may not be prepared to pay for their medical expenses, whether planned or unplanned,” CareCredit said.

Alternatives to high-rate medical financing

Maybe so, but jumping for high-rate financing should be a last resort. Among the strategies recommended for coping with medical costs are: 

  • Ask for a payment plan from the medical provider, which may have no interest or a low interest rate.
  • Negotiate the bill and seek help from programs designed for ability to pay.
  • Budget for medical expenses and seek informal loans from family and friends to close any gaps before using high-rate financing.

Beware of deferred interest promotions

According to CareCredit's terms and conditions filed with the Consumer Financial Protection Bureau, the card's standard APR is 26.99 percent.

By comparison, the current national credit card average APR is 16.99 percent. The national average APR for low-interest cards currently stands at 13.87 percent. 

Reduced rates may be available for purchases over $1,000 financed for more than 24 months, according to CareCredit's website.

The card may also offer deferred interest promotions for purchases over $200. The deferred interest plan can be a savings for some – and a costly debt trap for others who fail to pay the full balance by the end of the promotional period.

Deferred interest promotions are usually billed as “no interest for six [or 12 or 18] months” if the balance is paid in full by the end of the period. If not, or if a payment is late, all the interest that built up during the deferral period is added to the balance. About 20 percent of participants in the programs aren't able to escape the deferred interest, a CFPB study found. 

CareCredit settled with CFPB in 2013

In 2013, CareCredit agreed to pay $34 million in refunds to cardholders who signed up for the card without receiving adequate disclosures of the terms. The refunds were part of a settlement with the CFPB and New York Attorney General's Office.

According to a 2014 study by the Government Accountability Office, CareCredit is the leading issuer of medical credit cards, with 4.4 million cardholders in 2013. The report also listed Citibank, Wells Fargo and Comenity – another store-card specialist – as issuers of medical cards.

Urgent care centers look to card use

Urgent care centers, a rising alternative for everyday medical care, are seeing some outlets offering medical credit cards, but “it is not a big trend that we are hearing about,” Laurel Stoimenoff, CEO of the Urgent Care Association, said in an email response to questions.

However, as patients bear more financial responsibility, “urgent care operators are looking for opportunities to reduce their risk,” she said. Some may put a hold amount on a credit card, for example, until a claim is fully processed.

Payment programs aren't common at urgent care centers, Stoimenoff said. More often, a provider will offer medical discount programs to reduce patient costs. The cost per visit for patients averages about $130 to $140, according to the association.


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Updated: 12-10-2018