Health care credit cards are designed to help consumers pay for uninsured health costs. They're supposed to be a better deal than regular credit cards, but they seem to draw the same kinds of complaints from consumers.
Amanda, of Newnan, Georgia, got a GE Money CareCredit card nearly two years ago to finance some extensive dental work. The terms were excellent - pay it off in 24 months and there would be no interest charges. She says she rapidly paid down the balance.
"I received a letter in February stating they were reducing my credit limit from $4,000 to $1,000 because of my credit score," she told ConsumerAffairs.com. "Well my credit score hadn't changed until they closed my account."
Amanda said she wasn't that upset, since she had paid her balance down from over $2500 to $346.
"Then I check my account today and they put $679 of accrued interest on my account. I highly recommend that you avoid them at all costs!"
Minnesota Attorney General Lori Swanson sees a bigger problem with these cards. When health care providers receive incentives to get their patients to open accounts, she says consumers often lose.
Swanson has just sued a Minnesota chiropractic clinic that she says enrolled patients in health care credit cards without their permission and then placed charges of up to $5,040 on those credit cards without patients' consent.
The lawsuit was filed against Express Health, P.A., a Minnesota chiropractic clinic, and its owner, Cory Couillard, D.C. The lawsuit alleges that Express Health and Couillard aggressively enrolled patients in the CareCredit Credit Card offered by GE Money Bank, convincing some patients to complete applications by telling them that they were not applying for a credit card but that the clinic simply wanted to check to see if they would qualify for credit.
The complaint further alleges that, unbeknownst to these patients, Express Health and Couillard then submitted the application to GE Money Bank, which issued a CareCredit credit card in the patient's name. To make matters worse, according to Swanson, the defendants sometimes submitted to the lender false annual income for patients, in some cases doubling or more patients' actual income. Once patients were issued a credit card, the defendants placed lump-sum charges of up to $5,040 on the credit card, without patients' knowledge or consent.
"The clinic engaged in predatory lending, only with health care credit cards instead of subprime mortgages," Swanson said. "The clinic jeopardized patients' credit ratings by fraudulently signing them up for credit cards and then charging their accounts thousands of dollars," she added.
GE Money Bank, the nation's largest issuer of health care credit cards, describes the CareCredit Credit Card as a "health care credit card that can be used as a payment option for certain expenses not covered by insurance or to bridge situations when desired care exceeds insurance coverage."
While a patient may believe they are borrowing the money interest-free, if they do not pay back the amount borrowed on a CareCredit credit card on time, default interest rates of up to 29.99 percent apply.
Swanson says patients should be very wary of high-pressure sales pitches in which they are marketed health care credit cards by health service providers. She said that chiropractors, dentists, medical clinics, cosmetic and eye surgeons, weight loss programs, hearing aid dispensers, and other providers sometimes aggressively promote health care credit cards as a way to make money for their clinics but that the credit cards may not always be in the best interests of patients.
"A clinic's primary interest in marketing health care credit cards as a sales agent for the lender is to boost its bottom line," Swanson said. "This may collide with the best interests of the patient, particularly when the credit cards come with high interest rates and high fees."
To illustrate the point, Swanson said her office received a complaint from a 91-year-old Minnesota woman whose hearing aid dispenser convinced her to take out a health care credit card to pay for her hearing aids. The woman- who lives on $12,000 per year in Social Security benefits-made all of her monthly payments of around $110 on time and thought that the credit card company would bill her for her final payment.
When she didn't receive a bill, she made the final payment just a few days after it was due. The credit card company then billed her for interest of $1,200--charged retroactively to the date of the original charge. Swanson says it turned out to be a very expensive way for a senior citizen on a fixed income to finance her hearing aids.