January 03, 2023

Senators Warren, Markey Raise Concern over Misleading and Harmful Promotion of “Medical Credit Cards” to Vulnerable Patients Facing High Costs

“Patients - often under duress because of concerns about their medical care - are being pushed into and then locked into medical credit cards” with high interest rates and unfair repayment terms

Text of Letters (PDF)

Washington, D.C. — United States Senators Elizabeth Warren (D-Mass.) and Edward J. Markey (D-Mass.) led their colleagues in sending letters to Synchrony Bank and Wells Fargo raising concerns about their medical credit cards and the potential financial harm they may inflict on patients. The lawmakers are requesting information to determine the prevalence of medical credit cards to cover the high costs of health care services, and the impact they are having on card holders.

“(T)he current structure of our health care system often requires that patients enter into medical debt in order to access services they need,” wrote the lawmakers. “Within that context, patients – often under duress because of concerns about their medical care  – are being pushed into and then locked into medical credit cards despite the availability of alternative payment options that might be more beneficial and offer lower interest rates.”

Medical credit cards are credit cards that can only be used to cover health related costs at specific partner hospitals or providers. Hospitals, care facilities, and providers promote these credit cards to patients who are trying to cover the cost of their health care services. And banks have identified these cards as an opportunity to profit off of vulnerable patients who are unable to afford their medical care. 

“Many medical credit card companies have lured patients with pitches of ‘no interest’ periods ranging from six to 24 months, which are actually deferred interest promotions that are controversial and allegedly inherently deceptive,” wrote the lawmakers. “These promotions tout ‘no interest’ but actually interest is accruing during the promotional period and will be retroactively charged if the entire balance is not paid off by the end of the promotional period.”

Nearly ten years ago, the Consumer Financial Protection Bureau and several Attorneys General found that medical credit card companies were misleading card holders. Synchrony Bank in particular offers CareCredit, is “one of the largest issuers of [medical credit] cards,” and has over 12.7 million card holders and 250,000 providers across the country. Wells Fargo also has their own medical credit card called Health Advantage.

“Another disturbing feature of medical credit cards is that the available credit is typically set to the cost of the service, ‘meaning the card is maxed out immediately, damaging card holders’ credit scores,’” concluded the lawmakers. “The cards may also adversely impact consumers credit reports because of the way they are treated by credit reporting agencies: the agencies recently agreed to remove 70% of medical debt from credit reports, but these changes will not benefit medical credit card holders because their debt is considered credit card debt and as such is ‘viewed less favorably by the bureaus.’”

The letter is also signed by Senators Bernie Sanders (I-Vt.), Chris Murphy (D-Conn.), and Sherrod Brown (D-Ohio). 

The lawmakers are requesting information about these potentially predatory medical credit cards no later than January 12, 2023.