How Does CareCredit Work?

Healthcare is expensive. In addition to rent or mortgage payments, healthcare costs can be one of the biggest monthly budget items for many individuals.

Paying medical bills can be a financial burden and a significant challenge. To help consumers address this challenge, a variety of well-known lenders and healthcare companies–including GE Capital, JPMorgan Chase, CitiGroup, Capital One, UnitedHealth Group and Humana–launched credit cards specifically designed to help cover the high costs of healthcare. While many of these firms have since stopped participating in the program, revolving credit lines for use to cover healthcare costs are still available to consumers.

How CareCredit Works

CareCredit is a division of Synchrony Financial (SYF). Synchrony is one of the largest provider of private label credit cards in the U.S.

Synchrony’s CareCredit has entered into agreements with a broad range of healthcare providers that will accept its card as payment for their services; the card is accepted by over 200,000 healthcare providers in the United States.

The card can be used to cover traditional medical insurance co-payments​ on covered services. The card can also be used for elective medical procedures that are not covered by traditional insurance plans. Some of the medical procedures and wellness services that the card can be used for include vision care, cosmetic surgery, dermatology services, dental services, and hearing care.

The providers range from doctors, dentists, and surgical centers to vision care and hearing centers, hair restoration and even veterinary services. CareCredit cardholders can go to the CareCredit website and enter a zip code to find local providers that take the card.

By paying with the CareCredit card, consumers are eligible to participate in short-term financing offers that enable them to make payments over six, 12, 18 or 24 months. In addition, there are no interest charges as long as they spend at least $200 and pay the full bill within the agreed-on time period. Extended time periods up to 60 months for minimum purchase amounts of $2,500 are also available, with interest rates as low as 17.9%.

CareCredit Is in Business to Make a Profit

While their marketing pitches focus on providing access to affordable healthcare, it is important for consumers to keep in mind that CareCredit–and other similar healthcare credit card companies–are in business to make a profit.

They offer no-interest financing, counting on many consumers overextending themselves and being unable to pay their bills in full, thus incurring expensive financing charges. They may also count on consumers misunderstanding the terms.

According to the Consumer Financial Protection Bureau (CFPB), CareCredit has “misled some consumers during the enrollment process by not providing adequate guidance clearly laying out the terms of the deferred-interest loans.” Such loans assess interest starting from the date of purchase throughout the promotional period; if cardholders fail to pay the debt in full by the end of that period, they must pay all the accrued interest (not just interest on the remaining balance).

In 2013, CFPB ordered CareCredit (at that time, CareCredit was a subsidiary of GE Capital) to refund $34.1 million to cardholders. In response, the firm created a CareCredit Certification with its providers “in an effort to ensure that every CareCredit card applicant is given a clear, easy-to-understand explanation of financing options available.”

However, the firm’s “promotional financing options”—the ones with no-interest, or a relatively low interest rate—are not available through every provider. Cardholders should check with their provider to determine the available options. 

CareCredit also advises cardholders that “paying only the minimum due on your account each month may not pay off your balance before the end of the promotional period” and to contact the company to ensure that you are paying the correct amount “to take advantage of your special financing promotions.”

Complexities like this are not limited to CareCredit’s offerings. A medical credit card survey by a group called Consumer Action found similar practices by other healthcare credit card providers.

The Bottom Line

Healthcare credit cards provide a way to make medical expenses more manageable. Of course, consumers must remember that the financing behind these credit cards is provided by for-profit companies that are in business to make money. If you’re not careful, you can incur significant expenses from the associated fees. Like all credit cards, healthcare-oriented credit cards should be used in a cautious and responsible manner. This includes reading the fine print and having a complete understanding of terms and associated expenses.