Med­i­cal credit cards can mean aches, pains

The Oklahoman (Sunday) - - BUSINESS - BY MATTHEW PERRONE AP Health Writer

Few peo­ple look for­ward to a trip to the doc­tor or den­tist, es­pe­cially if they’re not sure how they will pay for it. Some choose to use a spe­cial kind of credit card of­fered by med­i­cal pro­fes­sion­als to pay for care at cer­tain lo­ca­tions or net­works. Of­ten pitched by of­fice as­sis­tants, they can seem like a quick fix for pricey pro­ce­dures not cov­ered by in­sur­ance in­clud­ing den­tal work, cos­metic surgery or laser vi­sion cor­rec­tion.

Nearly a third of Amer­i­cans re­port trou­ble pay­ing their med­i­cal bills and many have taken on credit card debt to pay the ex­penses, ac­cord­ing to a re­cent sur­vey by the Kaiser Fam­ily Foun­da­tion.

But con­sumer ad­vo­cates warn med­i­cal credit cards can sad­dle pa­tients with un­ex­pected penal­ties and sky-high in­ter­est rates.

Credit con­fu­sion

One of the big­gest dan­gers is that pa­tients of­ten don’t un­der­stand the fi­nan­cial terms or even that they are sign­ing up for a credit card, ac­cord­ing to lawyers who have rep­re­sented cus­tomers.

“There is a lot of mis­un­der­stand­ing. Pa­tients think they are just set­ting up an in­stall­ment plan with the den­tist,” said Gina Cal­abrese, co-di­rec­tor of St. John’s Univer­sity School of Law’s Pub­lic In­ter­est Cen­ter in New York. “They don’t un­der­stand they have opened a new line of credit and all the risks in­volved with that.”

Most cards fea­ture a “zero in­ter­est” pro­mo­tional pe­riod of up to 18 months. But then the in­ter­est rate can jump to 25 per­cent or higher. Those de­tails can be glossed over or skipped en­tirely when pa­tients sign up.

In cases cited by U.S. author­i­ties, some con­sumers never re­ceived a copy of the credit card terms and had to rely on spo­ken ex­pla­na­tions from staffers who had lit­tle train­ing on the card de­tails.

Sur­prise in­ter­est

Another po­ten­tial pit­fall is some­thing called de­ferred in­ter­est. That means if con­sumers don’t pay off the en­tire pro­ce­dure dur­ing the “in­ter­est­free” pe­riod, they can be retroac­tively charged for in­ter­est dat­ing back to when they first signed up.

For ex­am­ple, a pa­tient might pay off $900 of a $1,000 pro­ce­dure dur­ing a card’s pro­mo­tional pe­riod. But be­cause the amount wasn’t fully paid off they now owe in­ter­est on the en­tire bill, of­ten at a dou­ble-digit in­ter­est rate. “The way th­ese com­pa­nies make money is on the con­sumers who don’t pay off the en­tire bal­ance dur­ing the pro­mo­tional pe­riod,” said Chi Chi Wu, an at­tor­ney with the Na­tional Con­sumer Law Cen­ter.

Ad­di­tion­ally, pay­ing the card’s min­i­mum monthly fee usu­ally won’t pay off the ex­pense be­fore the retroac­tive in­ter­est kicks in.

For pa­tients who de­cide to take on med­i­cal credit, ad­vo­cates say it’s es­sen­tial to pay off the en­tire bor­rowed amount within the pro­mo­tional pe­riod.

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