Connor Keenan was enjoying a hamburger at McDonald’s when he suddenly cracked one of his back teeth. At just over 20, he realized he hadn’t seen a dentist in ages, largely because his family lacked dental insurance. Feeling frustrated, he searched for a nearby dentist in Chicago that had late hours.
He only had one credit card and no extra funds or health insurance to rely on.
“I received a CareCredit brochure and decided to go for it,” he recalls.
CareCredit, a product from Synchrony Bank, is a medical credit card often suggested by medical offices for those unable to pay their bills outright. Other similar options include Wells Fargo Health Advantage and Alphaeon Credit.
Keenan acknowledges that he could have used a regular credit card, but he was wary of the interest charges if he took too long to pay it off. Additionally, he found it unsettling that an authority at the dental office was recommending this financial solution. Reacting quickly, he applied for CareCredit and was approved to cover his dental costs completely.
It wasn’t until after completing the payment that he learned about the deferred interest. If he hadn’t managed to pay off the balance within the 12-month promotional period, he would face interest rates that could soar close to 30% of the original bill, not to mention late fees.
This revelation heightened his anxiety, prompting him to commit to paying off the card as swiftly as possible. He cut down on daily expenses, eating simple meals like rice and beans. Fortunately, he met the deadline, paying off the card within a year without incurring any interest.
However, this isn’t the case for many Americans. Between 2018 and 2020, medical credit cards financed $23 billion in medical expenses, leading to $1 billion in deferred interest payments—pure profit for the companies. Approximately one in four borrowers struggles to repay on time.
Some suggest that for people like Keenan—those who are young, uninsured, and lack cash—these credit cards can be a necessary way to access financing they otherwise wouldn’t have. But for others, it feels as though they are sold something that might end up being a trap, perhaps leading to further financial strain.
Understanding medical credit cards is essential. They differ from standard credit cards in that they often have a promotional interest-free period lasting from six months to two years. If the balance is paid off during this time, it’s like having an interest-free loan.
However, if the balance isn’t cleared by the end of this period, the original bill accrues interest, which can include all prior payments made, plus the remaining amount. Keenan saw this firsthand when he faced dental issues but many others encounter it as well. According to research, around two-thirds of dental offices offer these medical credit cards to patients.
Podiatrists follow closely behind, with 45.7% of practices providing them, along with chiropractors, physical therapists, and other specialists. These cards are particularly common in urgent care situations where insurance coverage may fall short.
Patricia Kelmer, senior director of health care campaigns at the U.S. Public Interest Research Group, mentioned that these cards are not just limited to dentists anymore; they’re appearing in various medical settings. She warned that patients might unknowingly pile up debt because of these financial products.
Kelmer pointed out that these loans typically require repayment within 12 to 18 months to avoid high interest, and monthly payments are often mandatory. In some cases, the minimum payment required by a card provider may not cover the necessary amount to pay off the loan in a manner that avoids deferred interest.
This puts many patients in a precarious position, leading to potential financial troubles down the road. Providers can decide what types of procedures get covered, which brings up ethical concerns, especially regarding optional surgeries that patients might feel pressured to finance.
Kelmer underscored that consumers often make credit decisions with all their information readily available from home, whereas in medical settings, the stakes feel higher. Who truly bears the responsibility for avoiding medical debt is murky at best.
Reflecting on his experience, Keenan has mixed feelings about using medical credit cards again. He’s reluctant to seek them out unless a sensible payment plan is offered. Last year, when he broke a toe, he managed to pay a $1,500 bill through the hospital’s installment plan, which was straightforward and different from the medical credit card setup.
“I think these cards are, for better or worse, definitely growing,” Keenan said. “They serve people with mid-range credit scores… and I can’t see how many would get by without these financial options in the market.”
