READY FOR A new type of plastic? Meet the medical credit card. These credit cards — which used to be marketed exclusively to those opting for elective surgery, like breast enhancement and dental veneers — are increasingly being shopped to patients struggling to pay for medical necessities.
Medical facilities used to partner with these patients to offer interest-free financing. But now more ask folks to sign up for a medical credit card as an alternative to having their accounts sent to collection, says Tim Robbins, director of counseling for Consumer Credit Counseling Service of Montana. The result? More people are paying high interest rates on health-care expenses they already can't afford.
Offered by banks like GE Money (GE: 28.32, -0.80, -2.74%) and Citigroup (C: 17.61, -0.53, -2.92%), these cards are similar to regular consumer credit cards. The difference is that they can only be used for health-care expenses. Part of their appeal is their extended 0% teaser rates. GE Money's CareCredit card, for example, offers a 12-month introductory period with no interest. Like standard credit cards, if a customer makes a late payment, the 0% introductory period ends and the interest rate skyrockets. (In CareCredit's case, to at least 27%.) Since these cards are being offered to folks who are already struggling to pay their health-care obligations, there's a high likelihood they won't be able to pay them off within that first year, says Gail Cunningham, senior director of public relations for the National Foundation for Credit Counseling.
Medical facilities used to partner with these patients to offer interest-free financing. But now more ask folks to sign up for a medical credit card as an alternative to having their accounts sent to collection, says Tim Robbins, director of counseling for Consumer Credit Counseling Service of Montana. The result? More people are paying high interest rates on health-care expenses they already can't afford.
Offered by banks like GE Money (GE: 28.32, -0.80, -2.74%) and Citigroup (C: 17.61, -0.53, -2.92%), these cards are similar to regular consumer credit cards. The difference is that they can only be used for health-care expenses. Part of their appeal is their extended 0% teaser rates. GE Money's CareCredit card, for example, offers a 12-month introductory period with no interest. Like standard credit cards, if a customer makes a late payment, the 0% introductory period ends and the interest rate skyrockets. (In CareCredit's case, to at least 27%.) Since these cards are being offered to folks who are already struggling to pay their health-care obligations, there's a high likelihood they won't be able to pay them off within that first year, says Gail Cunningham, senior director of public relations for the National Foundation for Credit Counseling.
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