David Zhao was told by a dentist that his gums were receding and needed a special mouthguard or else he would need surgery. An assistant came to him with a clipboard and told him he would need to initial the document before leaving the dentist’s office. Zhao, lying in the chair with fluoride trays in his mouth, didn’t thoroughly read the document and wasn’t aware he was signing up for a CareCredit credit card. Three weeks later, Zhao received a $1,200 bill from CareCredit, and was shocked to find that his dentist’s office had signed him up for a credit card with no interest, which charged 26.99% in deferred interest if he didn’t pay the balance within a certain time. Zhao had to take out his savings to avoid the interest rate.
Zhao’s experience is not unique; many patients in the US sign up for CareCredit credit cards without fully understanding the terms, often under stress or duress. CareCredit is the largest medical credit card company in the US, and has 270,000 participating providers. Since 2017, the US has seen an increase in consumer complaints about predatory lending practices from medical credit companies.
Consumer advocate Elisabeth Benjamin says that there are people who sign up for these credit card programs without knowing what they’re getting into and that the costs can be financial burdens on low-income individuals and families. When patients don’t pay off the balance within the promotional period, they are charged all the interest that would have accrued since the original purchase date, at rates that can reach 30% or more. This can create a cycle of debt for families who are struggling to make ends meet.
According to the Community Service Society of New York, many patients, including those from low-income and minority communities, are vulnerable to predatory lending practices because they do not have financial literacy or negotiation skills. Non-profit hospitals offer financial assistance and charity care for those who do not have sufficient insurance coverage or financial resources to pay for treatment.
CareCredit claims that they have a comprehensive training program that teaches providers about the product’s terms and about referring patients to disclosures about its workings. While the company boasts that 80% of cardholders pay off their balance within the promotional period, the debt-collection lawsuits continue to rise for those who can’t pay or don’t comprehend the terms.
