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What’s the deal with health care credit cards? Four things you should know

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Recently, many patients facing medical procedures have seen their health care providers suggest deferred interest rate credit cards as a payment option. Unfortunately, health care providers don’t always explain how these deferred interest credit cards work. We want to make sure that you get the facts you need.

Four things to know about cards with deferred interest rates

This type of credit card isn’t new. You may have seen ads on television, online, or in retail shops for promotional rates like zero-percent interest for the first year. No matter where the credit cards come from—a medical office or a mall store—they have a few features in common. Here’s what you need to know:

1. How to avoid paying interest

Make on-time payments each month and pay off your balance by the end of the promotional period. Minimum payments usually aren’t enough to pay off your entire balance by the end of the promotional period, so think about paying more than the minimum amount each month. Or, save up enough to pay the final amount before the promotional period ends.

2. What happens at the end of the promotional period

If you haven’t paid off the balance for your purchase when the promotional period ends, you’ll be charged interest on your balance for each month, starting from when you first made the purchase. Your credit card company must tell you the date by which you must pay off your balance to avoid paying interest. The date must appear on the front of your bill. If you aren’t sure when your promotional period ends, call your credit card company.

3. Using the card for other purchases

Before using the card again, check with the credit card company to see if you have a “grace period” and how it works. Without a grace period, you’ll pay interest on new purchases from the date you make them.

4. Details matter

Keep track of minimum payments and payment addresses to make sure small errors don’t add up to large interest and penalty charges.

Case in point: GE CareCredit cards

We brought an enforcement action against GE CareCredit to prevent deceptive and unfair credit card enrollment tactics. The enforcement action came after an investigation, where we found that consumers got incorrect information about how their cards worked, and later submitted complaints to us.

As a result of our enforcement action, all consumers enrolling in the CareCredit card in a health care provider’s office will receive a comprehensive “welcome” call from CareCredit within two to three days of enrollment. Certain consumers who sign up for a CareCredit card will speak directly to a representative prior to any enrollment or purchase of services. Additionally, CareCredit will enhance their disclosures to warn consumers when their promotional period is about to end. The company will also do more training of health care office personnel who offer the card. Finally, we ordered CareCredit to reimburse up to $34.1 million to customers who were victims of their deceptive credit card enrollment tactics.

Actions you can take

If you’re having trouble with a deferred interest credit card, you can submit a complaint online or by calling (855) 411-2372.

For more answers about how deferred interest medical credit cards work, check out Ask CFPB.

  • Connie Stone, CFP

    This is a terrific wake up call! It’s easy for seniors (and all of us) to be trusting of doctor’s offices, and think that they will be fair with us. I know a widow who decided to use a deferred interest rate medical credit card for expensive dental work. She was shocked when the interest was posted to her account. She could have used her home equity line to pay a lower interest rate than the credit card carried. She didn’t itemize deductions, so in her case, the interest payments weren’t tax deductible.

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