“What consumers would have to be concerned about is the cost of the credit, and whether the interest rate is so high that the credit should be prohibited,” said Pam Banks, senior policy counsel for Consumers Union, the policy arm of Consumer Reports. “But the question is whether consumers are in a Catch-22 situation, because they need the services and they can't afford the payments.”
CareCredit cards are often applied for inside the offices of more than 160,000 healthcare providers who offer them nationwide, but critics say the providers' staff sometimes did not make all the terms of credit clear. For example, the cards were often described as having 0% interest, when in reality that was an introductory rate that jumped to nearly 27% if the balance was not paid in full during a promotional period.
About one-quarter of all the people who signed up for 0% introductory rates ended up paying 26.99%, an announcement from the attorney general's office said.
Dental practices comprise more than half of CareCredit's business, but the cards are available to cover many services for which insurance may be difficult to find, such as Lasik procedures, cosmetic surgery, chiropractic services and visits to hearing professionals.
A company spokeswoman emphasized that the credit lines are for elective procedures. While some of the services may be performed in hospital outpatient or ambulatory centers, the cards cannot be used for emergency room visits, chronic care or acute care, or to finance existing hospital debt.
Mark Rukavina, the former director of the patients-rights group Access Project, who has since started his own consulting firm called Community Health Advisors, said healthcare credit cards were controversial several years ago when several state attorneys general opened investigations into the lending practices. He said fewer hospitals and physicians offices seem to use them today.
“I always thought the irony of these medical credit cards were that they worked the best for people who needed them the least,” he said. “The people who really needed assistance with their medical bills were the ones who were likely to experience these jumps in interest rates.”
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