The CareCredit Healthcare Credit Card

Andrea Osmun

Andrea Osmun | Blog

Apr 08, 2014 | Updated Apr 27, 2016

CareCredit is a healthcare credit card that some people get through doctors, dentists, and veterinary offices. The Consumer Financial Protection Bureau (CFPB) ordered GE CareCredit on Dec. 10 to reimburse potentially more than 1 million cardholders $34.1 million for deceptive credit card enrollment practices.

Lydia Matetic, of Elyria, OH, has had a CareCredit card since the early 2000s. She’s used it mainly for expensive dental procedures that haven’t been covered completely by her insurance provider. She’d pay off the balance, and then charge another pricey procedure to the card when necessary. In the past decade or so, she has never extended the 0% interest, 12-month promotional period. That is, until now.

CareCredit allows consumers to have a balance with no interest for six to 24 months. After the promotional period expires, they start charging a high interest rate. Whenever Ms. Matetic wasn’t able to pay off the balance within the 12 months, she would transfer it to another credit card with a smaller interest rate. This time, she wasn’t able to.

“I tried to transfer it [to another card], and that credit card had a limit on it of how much you could transfer,” she said. “They didn’t let me transfer it, so I need to find a credit card that will have a good interest rate that I could transfer it to so I don’t pay a big interest rate.”

The charge was from a 2013 dentist’s office visit, totaling $772. Ms. Matetic said her statement showed the “promotional expiration date,” and then the “deferred interest charge.” After she passed the promotional expiration date, she was charged a deferred interest rate of 26.99% and a deferred interest charge of $305.

When I asked her if she knew about the high interest rate in advance, she said, “Yes.” In response, I asked if she understood what deferred interest is.

“The best thing is, if you’re taking it out, you have to pay it off at the end of the 12 months no matter what,” she said. “Otherwise, you’re stuck with a bigger payment.” Though somewhat correct in her understanding, she clearly missed the key characteristic of deferred interest – backdated interest charges.

She was surprised to find out that if the balance is not paid within the promotional period, CareCredit charges interest back to the day the charge is made, even on any portion of the balance that is already paid off. After many years of using her CareCredit card, she had no idea she’d have to pay interest for the 12 months prior to the 26.99% interest rate taking effect.

“That stinks. So, you end up paying double. That’s not good. That’s a ripoff,” she said.

The CFPB says, “The product is sold by more than 175,000 enrolled providers across the country. There are about 4 million active CareCredit holders. Approximately 85 percent of CareCredit borrowers are placed in a deferred-interest financing plan.”

The CFPB received hundreds of complaints from CareCredit cardholders and determined that since January 2009, customers had not received adequate information about the card. The main problems the CFPB identified with CareCredit were: deceptive enrollment practices, inadequate disclosures, and poorly trained staff.

On Dec. 10, the CFPB ordered CareCredit to reimburse cardholders, notify consumers who incurred credit card charges that they may file a claim for reimbursement, and improve customer disclosures. CareCredit also has to improve the customer experience with service providers by training office staff to understand and communicate the terms of the card clearly and provide easy-to-understand disclosure forms to consumers before they sign up for the card.

CFPB spokesperson Michelle Muth Person said March 27 that the Bureau has asked GE CareCredit to “hire an administrator to oversee the reimbursements to consumers.” She added, “This step usually takes some time and reimbursements have not yet been made to consumers.”

In its “Cardholder Engagement Study Q42013,”, CareCredit says it focuses on educating consumers to understand the terms of their accounts through written disclosures (online and in print), extensively trained service providers, welcome kits, and follow-up phone calls from CareCredit representatives. CareCredit also specifies the details of the promotion, minimum monthly payment, promotional expiration date, and amount of interest accrued on each billing statement and sends a notice two-months before the expiration date.

If you have a CareCredit card or are ever asked to sign up for one, make sure you understand what you’re getting yourself into. If you don’t think you’ll be able to pay off the balance within the promotional period, don’t sign up. Find another financing option before you go to your healthcare provider’s office.

If you already have a CareCredit card, pay off your balance within the promotional period. If you’ve already passed the promotional period and still have a balance on your card, transfer it to a card with a lower interest rate or pay it off as quickly as possible.

If you are eligible to file a claim for reimbursement through the CFPB’s action, CareCredit should be notifying you. For more information about CareCredit, visit CareCredit.com. For more information about the CFPB, visit cfpb.org.

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