Exclusive | The hidden catch in interest-free medical loans costing Americans billions
Conor Keenan was biting into a burger at McDonald’s when he felt one of his back molars crack.He was in his early 20s and couldn’t remember the last time he’d been to the dentist.
His family never had dental insurance growing up.Mortified, he found a dentist open late near where he lived in Chicago.He had a single credit card, no extra money and no health insurance.“[The bill] was several thousands of dollars,” he recalls.“I was handed a brochure for CareCredit, so that’s what I did.”CareCredit, operated by Synchrony Bank, is a type of medical credit card advertised in clinical offices for people who don’t have the means to pay for their outstanding bills.
Other vendors of similar products include Wells Fargo Health Advantage and Alphaeon Credit.While Keenan acknowledges that he could have used his personal credit card for the purchase, paying off the charge over time would have accrued monthly interest.Plus, he said, there was something impactful about having “an authority figure” at the dentist’s office directly recommending a financial product.
It swayed him, and a quick CareCredit application was approved to pay the dentist in full.It was only after completing and paying for the procedure that Keenan learned about deferred interest on the expense.If he didn’t pay off the entire balance by the end of the 12 month 0% annual percentage rate (APR) period, he would be liable to pay all of the interest that accumulated throughout that time, which was likely in the neighborhood of 30% of the initial bill, plus late fees.His anxiety spiked, and he vowed to pay off the card as soon as possible.He lowered his daily expenses.
He stopped going out to eat, and ate rice and beans every Sunday.He hit his deadline and paid the card off in its entirety in a year without paying a dime in interest.But that’s not the story for thousands of Americans.
From 2018 to 2020, medical credit cards paid $23 billion in healthcare expenditures and generated $1...