Zhou said he asked if the mouthguard was insured, and the office staff said most of the costs were not. Instead, Zhou says, he was told he could sign up for a payment plan used by many Western Dental patients. As he lay in a chair, Zhou recalls, an assistant brought a clipboard and a document to start. Zhou used to read each page of the text closely, scrutinizing the terms. But he had fluoride trays in his mouth and was distressed about the condition of his gums. “Looking back, it was stressful,” he says. After the time was up, he recalls, a West Dental employee handed him a gift bag and led him out of the office.
Three weeks later, Zhou received a bill from Synchrony Bank, which owns CareCredit, the largest medical credit card company in the US It was $1,200. Among the charges in the statement, reviewed by TIME, were $425 for a mold made of her mouth and $290 in the contents of a gift bag, including an expensive mechanical toothbrush that Zhou didn’t ask for, she says. But that was just the first surprise.
Although the dentist’s office told Zhou he was signing up for an interest-free payment plan, he says he was actually signing up for what’s known as a deferred credit card, which doesn’t charge interest on payments during a promotional period, but imposes larger fees on top of actual payments if the user doesn’t pay off the entire balance within that period. Zhou says he had to withdraw part of his savings to pay off the card to avoid being charged 26.99% deferred interest. “I don’t want to meet the dentist again,” Zhao said.
Western Dental said it had no history of any complaints about Zhao’s account and could not comment further on the matter. Synchrony Bank said it could not comment directly on Zhao’s case, but said in a statement that its financial solutions are “transparent and clear” and that they have saved cardholders billions of dollars in interest over the years.
Zhou’s experience is not just a story of a bad encounter with a medical provider. It highlights how medical credit cards are gaining ground for patients across America as the cost of medical, dental, and veterinary procedures increases. CareCredit had 12 million cardholders and 270,000 participating providers in 2024, up from 4.4 million cardholders and 177,000 participating providers a decade ago, according to a May 2023 report by the Consumer Financial Protection Bureau (CFPB). The CFPB wrote: “The increased promotion and use of medical cards and installment loans can increase the financial burden on patients who may pay more than they otherwise would and may jeopardize medical outcomes.” Revenue in the medical patient financing industry was $15.3 billion by 2023, according to a report by research firm IBISWorld, which found that as health care becomes increasingly scarce due to rising premiums and insurance gaps, more patients are turning to medical loans or installments. plans.
Medical credit cards may prove beneficial to both patients and providers. Doctors’ offices can be prepaid without needing to chase clients for payment or insurance reimbursement, while clients can get approval on the spot to offer financial procedures they may not otherwise be able to afford. The “deferred interest” feature, which applies to interest-free loans during the promotional window, may also attract customers at a time when interest rates are high. CareCredit isn’t the only medical credit card—others include ScratchPay, Alphaeon Credit, and HealthyPlan.
Some cards can come with scary names and hidden fees, consumer protection lawyers say. If consumers do not pay off their card balance during the promotional period, they are charged all the interest that would have accrued from the original purchase date, at rates that can exceed 30%. CareCredit is the subject of a class-action lawsuit filed in New York in August 2024. It argues that the card’s interest rates—32.99% in May 2024—violate state laws on usury, which is the rate of interest on loan payments. (Synchrony told TIME it could not comment on that case.)
“I don’t think people understand what they’re signing up for,” said Elisabeth Benjamin, executive director of the Community Service Society of New York, a nonprofit research and advocacy group for people facing economic insecurity. “There are people signing up for these CareCredit programs who don’t even have $500 in savings.”
Sonia Romero, nursing home worker from Los Angeles, went to House Dental in South Gate, Calif., in September 2021 to see about replacing some of his missing teeth. She says her dental provider told her to sign some forms to determine her eligibility for a payment plan that would help cover the cost of the procedure, but did not mention Synchrony or CareCredit. Romero says he signed the forms but eventually chose not to undergo the procedure. So he was surprised when, a few months later, he received a loan from CareCredit for $3,437. The provider had signed up for CareCredit and billed him for a procedure he didn’t have—and he says the provider won’t correct the error.
House Dental could not be reached by phone for comment on this matter; Multiple email requests for comment were not returned.
Romero did not pay the bill, because he never had the procedure. He thought the ordeal was over until September 2024, when he learned he was being sued by Cavalry SPV I LLC, a debt buyer, for unpaid debt. The Cavalry says Romero now owes $4,231.82. He plans to contest the debt in a Los Angeles court in July 2025. “I was in danger because I was ashamed of my teeth,” Romero said, “and they took advantage of it.”
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Romero’s case raises the question of whether the problems with deferred interest credit cards should be blamed on the card companies themselves, or 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 sign up for medical credit cards even if their insurance or Medicaid will cover the process, or when they can get financial help from nonprofit hospitals.
Some providers sign patients up without properly explaining how deferred interest works—or making it clear that people are signing up for a credit card, said Joy Dockter, senior attorney at the Western Center on Law & Poverty, which provides advocacy services in California. In such cases, Dockter says, it’s the suppliers, not the product they’re pushing, that’s to blame. Still, Dockter says, “medical credit card providers make it easy for them to become criminals.”
CareCredit said in a statement to TIME that all of its 270,000 participating providers must pass a training program that teaches providers how to explain that a product is a credit card, and walk patients through a disclosure of how the product works, the company says. CareCredit says 80% of its cardholders pay off their balance before the promotional period ends, meaning they pay zero interest. People use CareCredit to buy vitamins, beds, hearing aids, and fitness equipment, among other products, the company says. “For more than 35 years, CareCredit has provided simple and transparent financial options that make health and wellness products and services more accessible to consumers,” the company said in its statement.
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Yet even if the majority of CareCredit customers understand the deferred interest increase and pay off balances before the end of the promotional period, the company is making a lot of money from those who don’t. The latest public earnings report released by Synchrony Bank states that the company’s Health & Wellness products, the largest of which is CareCredit, earned $956 million in interest and loan payments in the third quarter of 2024, a 13% jump from the same period. last year.
Even the savviest consumers can be confused by medical credit cards. Michael Imboden, a 52-year-old IT professional from Atlanta, signed up for a CareCredit card in early 2024 to pay for his wife’s $5,400 hearing aids. Imboden says the documents did not detail the terms of the loan, including how much he would need to pay each month to make payments within the promotional window and avoid deferred interest. He had to get a calculator and figure out the total for himself, since his bills counted the minimum amount due and his balance. Furthermore, Imboden says, when he was told he had two years left to pay off the loan, he actually had 23 months. “It’s a slippery slope,” he says. “They offer an opportunity to get credit, but they also bet on people who miss payments or don’t read the fine print.” You paid on time, but you are worried that others will face unexpected costs.
Medical credit cards with deferred interest rates often end up hurting people with low credit scores, according to the CFPB. People with credit scores below 619 received interest on nearly one-third of deferred health care purchases, according to the bureau, meaning those customers couldn’t pay off their cards before the promotional period ended. As a result, many go into debt. Finally, if consumers miss too many payments, their credit scores will suffer. If their debt grows high enough, credit card companies often sue them for debt.
Debt collection cases usually end up in favor of card issuers, said Chi Chi Wu, senior attorney at the National Consumer Law Center. In some cases, Wu says, that allows the credit card company to garnish a customer’s wages or take money from their bank accounts.
States have made efforts to closely regulate medical credit cards. A California law that went into effect in 2020 requires the patient, not the provider, to fill out the application and refuses to do so while under anesthesia. A bill passed in Illinois in August 2024 prohibits dentists and their staff from filling out customer applications for third-party lines of credit and prohibits dental offices from signing up patients for third-party credit cards with deferred interest offers. “I wanted to make sure that if you go ahead with a deferred interest credit card, you know what you’re signing up for,” said Margaret Croke, an Illinois state representative who sponsored the bill. The CFPB said last year that it plans to monitor how financial institutions market their products to health care providers, looking specifically at whether financial institutions are putting borrowers at risk.
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