Consumer Bureau Raises Concerns About Medical Credit Cards

Fintech payment products create billions in medical debt for sick consumers

The Consumer Financial Protection Bureau (CFPB) is raising concerns about so-called "medical credit cards" after releasing a new report showing the specialty financial products can push sick consumers into a cycle of debt.

The report finds that these specialty products are typically more expensive for patients than other forms of payment, including conventional credit cards, with interest rates often reaching above 25%. These products can add, instead of remove, the financial stress that comes with medical bills, including decreased access to credit, costly and lengthy collection litigation, and an increased likelihood of bankruptcy.

“Fintechs and other lending outfits are designing costly loan products to peddle to patients looking to make ends meet on their medical bills,” said CFPB Director Rohit Chopra. “These new forms of medical debt can create financial ruin for individuals who get sick.”

According to available public information, the financing terms for medical credit cards and medical installment loans include interest rates significantly higher than traditional consumer credit cards, 26.99% to 16%, respectively. These products often have deferred interest plans, with all accrued interest potentially becoming due at the end of a defined period, which can prove especially expensive and unaffordable for patients.

The CFPB report notes that people used specialty medical credit cards or loans with deferred interest periods to pay for almost $23 billion in healthcare expenses for more than 17 million medical purchases from 2018 to 2020. They also paid $1 billion in deferred interest. These payment products are used for a wide range of basic medical care, including emergency room visits, medications, and lab work, as well as for dental and vision visits and treatment. The payment products may cover medical bills as low as $35 and as high as $40,000.

Consumers can submit complaints about medical credit cards and installment loans and about other financial products or services by visiting the CFPB’s website.

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