Zhou said he asked if the mouthguards were covered by insurance, and office staff said most of the costs were not. Instead, Zhou said, he was told he could sign up for a payment plan used by many of Western Dental’s patients. As he lay in his chair, an assistant came over with a clipboard and a document for him to sign, Zhou recalled. Zhou typically reads every page of the document, double-checking the terms. But he had a fluoride tray in his mouth and was stressed about the condition of his gums. “In hindsight, it was coercion,” he said. He recalled that after the appointment, a Western Dental employee gave him a gift bag and escorted him out of the office.
Three weeks later, Zhou received a bill for $1,200 from Synchrony Bank, which owns CareCredit, the largest medical credit card company in the United States. He said Time reviewed the statement’s allegations, which included $425 for a mold made of his mouth and $290 for items in the gift bag, including an expensive mechanical toothbrush that Zhou did not ask for. But that’s just the first surprise.
Although the dental office told Zhou he was signing up for an interest-free payment plan, he said that in fact he had signed up for a so-called deferred interest credit card, which charges no interest on payments made during the promotional period, but does not charge interest if the user fails to pay during that period. Pay off the entire balance and a high fee will be assessed on top of the original payment. Zhou said he had to use a chunk of his savings to pay off his credit cards so he wouldn’t be charged the 26.99 percent deferred interest rate. “I never want anything to do with dentists anymore,” Zhao said.
Western Dental said it had not made any complaints regarding Zhao’s account and could not comment further on the matter. Synchrony Bank said it could not comment specifically on Zhao’s case but said in a statement that its financing solutions are “transparent and clear” and have saved cardholders billions of dollars in interest over the years.
Zhou’s experience goes beyond unpleasant encounters with medical providers. It highlights how medical credit cards are increasingly being pushed to patients across the United States as the cost of health, dental and veterinary procedures rises. CareCredit will have 12 million cardholders and 270,000 participating providers by 2024, up from 4.4 million cardholders and 177,000 participating providers a decade ago, according to a May 2023 report from the Consumer Financial Protection Bureau (CFPB) who. “The increasing promotion and use of health cards and installment loans may increase the financial burden on patients, who may pay more than they would otherwise pay, and may harm health care outcomes,” the CFPB wrote, according to a report by research firm IBISWorld Showing revenue for the health care financing industry at $15.3 billion in 2023, the report found that as health care becomes increasingly unaffordable due to rising premiums and insurance gaps, more patients are turning to medical loans or installment plans.
Medical credit cards appear to be a boon to both patients and providers. Doctor offices can pay up front without having to track clients’ bills or insurance reimbursements, and clients can get approval on the spot to finance procedures they may not otherwise be able to afford. Advertising the “deferred interest” component of a zero-interest loan during a promotional window may also attract customers when interest rates are high. CareCredit isn’t the only medical credit card, others include ScratchPay, Alphaeon Credit and HealthiPlan.
Consumer advocates say some cards can come with shocking terms and hidden costs. If consumers do not pay off their card balance during the promotion period, they will be charged all interest accrued since the original purchase date, with interest rates up to 30%. CareCredit is the subject of a lawsuit seeking class-action status filed in New York in August 2024. (Synchrony told TIME it could not comment on the lawsuit.)
“I don’t think people understand what they’re signing up for,” said Elizabeth Benjamin, executive director of the New York Community Service Association, a nonprofit research and advocacy organization that serves people facing financial insecurity. “Some people who sign up for CareCredit don’t even have $500 in savings.”
Sonia Romero, nursing home worker Originally from Los Angeles, she went to House Dental in Southgate, California, in September 2021 to consider replacing some missing teeth. She said her dental provider told her to sign some forms to determine if she qualified for a payment plan to help pay for the procedure, but Synchrony or CareCredit was never mentioned. Romero said she signed the form but ultimately chose not to have the procedure. So a few months later, she was surprised when she received a bill from CareCredit for $3,437. The provider had signed her up for CareCredit and charged her for a procedure she didn’t have, and she said the provider wouldn’t correct the mistake.
House Dental could not be reached by phone for comment for this article; multiple emailed requests for comment were not returned.
Romero didn’t pay the bill because she never even had the surgery. She thought the ordeal was over until September 2024, when she learned she was being sued by debt buyer Cavalry SPV I LLC for unpaid debts. Cavalry said Romero now owes $4,231.82. She plans to challenge the debt in Los Angeles court in July 2025. “I was vulnerable because I was embarrassed about my teeth,” Romero said. “They took advantage of that.”
Read more: Why Your Pharmacy Experience Was Bad.
Romero’s case raises the question of whether problems with deferred-interest credit cards should be blamed on the credit card companies themselves, or if they should be blamed on providers who allegedly misled customers about what they were actually signing up for. Benjamin and other consumer advocates say unscrupulous doctors, dentists and veterinarians sometimes pressure consumers to apply for medical credit cards even if their insurance or Medicaid covers the procedure, or they might be able to get financial assistance from a nonprofit hospital.
Joy Dockter, a senior staff attorney at the Western Center on Law & Poverty, which provides advocacy services in California, said some health care providers do not properly explain how deferred interest works when they sign up patients, or make it clear that people simply Applying for a credit card. In this case, Docter said, the culprit is the vendors, not the products they market. Still, Docter said, “medical credit card providers make it easy for them to become bad actors.”
CareCredit said in a statement to TIME that all 270,000 participating providers must pass a training program that teaches providers how to explain the product is a credit card and educate patients about disclosures about how the product works. . CareCredit says 80% of cardholders pay off their balance before the promotional period ends, meaning they pay zero interest. People use CareCredit to buy products such as vitamins, beds, hearing aids and fitness equipment, the company said. “For 35 years, CareCredit has provided convenient, transparent financing options that make health and wellness products and services more accessible to consumers,” the company said in a statement.
Read more: Why mothers are underpaid for health care.
Yet even though most CareCredit customers knew about the deferred interest promotion and paid off their balances before the promotional period ended, the company still made a ton of money from those who didn’t. Synchrony Bank’s latest public earnings report showed the company’s health and wellness products, the largest of which is CareCredit, earned $956 million from loan interest and fees in the third quarter of 2024, up 13% from the year before. .
Even the savviest consumers can be confused by medical credit cards. Michael Imboden, a 52-year-old IT specialist from Atlanta, applied for a CareCredit card in early 2024 to pay for $5,400 in hearing aids for his wife. Imboden said the document did not detail many of the terms of the loan, including how much he would need to pay each month to pay off the loan within the promotional window and avoid deferred interest. He had to get a calculator and figure out the total amount himself because his bill only listed the minimum payment and balance. What’s more, Imboden said that while he was told he had two years to pay off the loan, he actually only had 23 months. “It’s a slippery slope,” he said. “They provide access to credit, but they also bet on people missing payments or not reading the fine print.” He paid off his bills on time but worried that others would be saddled with unexpected costs.
According to the CFPB, deferred interest medical credit cards often end up hurting people with lower credit scores. According to the bureau, about one-third of interest-deferred health care purchases by people with credit scores below 619 accrue interest, meaning these customers are unable to pay off their credit cards before the promotional period ends. As a result, many people are deeply in debt. Ultimately, if consumers miss too many payments, their credit scores will suffer. If their debt grows large enough, credit card companies will often sue them over the debt.
Chi Chi Wu, a senior attorney at the National Consumer Law Center, said debt collection lawsuits often end in judgments in favor of card issuers. In some cases, credit card companies can garnish customers’ paychecks or deduct money from their bank accounts, Wu said.
States have tried to regulate medical credit cards more strictly. A California law that took effect in 2020 requires patients, not health care providers, to fill out applications and prohibits them from filling them out while under anesthesia. An Illinois bill passed in August 2024 prohibits dentists and their employees from completing clients’ applications for third-party lines of credit and prohibits dental offices from signing patients up for third-party credit cards with deferred interest terms. “I want to make sure that if you’re going to use a deferred interest credit card, you know what you’re signing up for,” said Illinois Representative Margaret Croke, who sponsored the bill. The CFPB said last year it planned to monitor how financial institutions market their products to health care providers, paying particular attention to whether financial institutions put borrowers at risk.
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