How Does CareCredit Work?

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How Does CareCredit Work?

Medical costs may be a big financial burden and a considerable difficulty. As a result, a number of well-known lenders and health care firms, including GE Capital, JPMorgan Chase, Citigroup, Capital One, UnitedHealth Group, and Humana, provide credit cards to aid with the high expenses of health care. Even if several of these companies dropped out of the program, individuals may still get revolving credit lines to meet health-care bills.

CareCredit, a part of Synchrony Financial, is one of these credit lines (SYF).It has arrangements with a wide variety of health care providers to accept its card as payment as one of the major suppliers of private-label credit cards in the United States. Over 250,000 health care providers in the United States presently accept the card. 1

These cards might be a simple method to pay your medical costs, but they come with a high cost. If you do not pay off your amount in full by the conclusion of your first promotional term, using CareCredit might cost you money.

Key Takeaways

  • CareCredit by Synchrony has relationships with a wide variety of health care providers that accept its credit card.
  • Synchrony is a major supplier of private-label credit cards in the United States.
  • The card covers standard medical insurance copayments for approved treatments as well as elective medical procedures that are not covered by traditional insurance policies.
  • CareCredit does not charge a yearly fee.
  • Consumers should bear in mind that if you can’t pay back your debt within the promotional time, CareCredit may be a costly method to pay for medical expenditures.

How CareCredit Works

In certain ways, the CareCredit card functions similarly to a traditional credit card. The sole distinction is that it may only be used to reimburse regular medical insurance copayments on approved treatments. The card may also be used for elective medical treatments that regular insurance policies do not cover. The card may be used for a variety of medical treatments and wellness services, including vision care, cosmetic surgery, dermatological services, dental services, and hearing care.

Doctors, dentists, and surgical clinics are among the providers, as are eye care and hearing centers, hair restoration, and even veterinary services. CareCredit cardholders may search for nearby providers that accept the card by entering their zip code on the CareCredit website. 1

Financing Options

Consumers who use the CareCredit card are eligible for short-term financing solutions that allow them to make payments over six, twelve, eighteen, or twenty-four months. There will be no further interest charges if they spend at least $200 and pay the whole account within the agreed-upon time frame. Extended payment terms of up to 60 months are also available for minimum purchase quantities of $2,500, with interest rates as low as 17.9%.

However, keep in mind that the indicated annual percentage rate (APR) on these cards is far higher, at 26.99%. It also provides longer-term health care financing for 24-, 36-, 48-, or 60-month terms with APRs ranging from 14.9% to 17.9%. If you are late, you may be charged late penalties ranging from $15 to $39 every statement period.

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How to Apply for CareCredit

CareCredit’s online tool, CareCredit.com/Apply, allows you to pre-qualify for the company. 3

If you don’t wish to apply online, you may call the company’s toll-free number at 1-800-677-0718. There is an automatic system accessible 24/7, or you may apply with a live person Monday through Friday between 9 a.m. and 9 p.m. ET.

You may also apply in person at over 250,000 participating health care providers and retail outlets that accept CareCredit. CareCredit does not accept faxed or emailed applications. 1

Synchrony does not explain how it evaluates applicants or what the credit card criteria are.

CareCredit Requirements

Anyone may use CareCredit to see whether they are eligible for a card. This selection will have no effect on your credit score. In order to apply, you must supply the following information to Synchrony:

  • Name
  • Address
  • Date of birth
  • Individual taxpayer identification number (ITIN) or Social Security number (SSN) (ITIN)
  • Net income
  • Housing Information2

CareCredit Limits

Your credit history determines the credit limit on your CareCredit card. The minimum purchase on these cards is $200, while the maximum credit limit is $25,000 for people with strong credit. 4

Because of the high credit limits and simplicity with which CareCredit cards may be secured, they can be an excellent method for those with a low credit history to pay for medical expenditures. However, be aware that CareCredit cards might be costly if you fail to make your payments on time.

You may pay for some of your services or treatment with cash and part with the CareCredit card. 1

Risks of CareCredit

CareCredit’s marketing pitches emphasize giving its customers with access to inexpensive health care. But keep in mind that CareCredit (and other health care credit card firms) are in business to earn a profit. They provide no-interest financing and anticipate that many clients would overextend themselves and be unable to pay their payments in full. Those who find themselves in this scenario often face high borrowing costs.

Some health care companies provide branded medical credit cards, which are effectively unsecured lines of credit. Because the card does not belong to the Visa or Mastercard payment networks, it cannot be used for routine transactions. Rather, it is a method for physicians to enable patients to fund discretionary operations such as cosmetic surgery that are not covered by insurance. These products, like private label retail shop credit cards, often offer restricted use possibilities and higher long-term interest rates than general use credit cards.

Criticism of CareCredit

CareCredit “misled some customers throughout the enrolling process by not giving enough counsel clearly setting out the conditions of the deferred-interest loans,” according to the Consumer Financial Protection Bureau (CFPB). 5 Such loans charge interest from the date of purchase until the end of the promotional period. This implies that if cardholders are unable to pay off their debt in full before the conclusion of the grace period, they must pay the accumulated interest (not just interest on the remaining balance).

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In 2013, the CFPB ordered CareCredit (a subsidiary of GE Capital at the time) to repay $34.1 million to cardholders. 5 As a consequence, the company collaborated with its providers to develop a CareCredit Certification “in an attempt to guarantee that every CareCredit card application is provided a clear, easy-to-understand explanation of financing choices available.” 1

However, the company’s “promotional financing options” (those with no interest or a reduced interest rate) are not accessible via all providers. Cardholders should check with their provider to see what solutions are available.

CareCredit cardholders are advised that “Your card issuer will waive the interest you accrue if you pay your balance in full by the end of the promotional period if you use this type of promo financing, which may be advertised as no interest if paid within 12 months, or however long the agreed-upon promotional period lasts. However, since interest begins to accumulate on the day of purchase or balance transfer, if you do not pay off the amount in full before the end of the promotional period, the accrued interest will be assessed and added to your balance.” 6

Alternatives to CareCredit

If CareCredit does not appeal to you, there are other options for paying for health care. Check to see whether your service provider provides a pay-over-time agreement. Many big offices and facilities offer repayment programs that do not impose interest or fees as long as payments are made on time.

Consider opening a Health Savings Account (HSA) if it is accessible via your health insurance plan: You contribute money pretax, generally from your salary, and it grows tax-free until you use it for eligible health care costs. 7 If you have a group insurance plan through your job, there is a comparable tax-advantaged account called a flexible spending account (FSA), but you must utilize all of the money within the year you contribute them. 8

Because CareCredit works somewhat like a loan with a specified payback time, you may want to explore getting a personal loan from a bank or credit union instead. You will be charged interest along the way, but it will most likely be at a lesser rate than the interest charged by CareCredit if you do not pay off your whole amount by the conclusion of the time.

Finally, as an alternative to CareCredit, try utilizing a conventional credit card. If you notice a card with a 0% APR offer, consider applying for it to pay your medical costs. Minimum payments might be lower. These promotional periods are often 18 or 24 months lengthy, similar to CareCredit’s. Even if you haven’t paid in full by the conclusion of the promotion, you’ll almost certainly be charged a reduced interest rate—and just on the remaining sum.

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What Credit Score Is Needed for CareCredit?

Synchrony does not define what credit score is required to be approved for CareCredit, and it does not disclose which credit agency it utilizes to get credit reports. Cards that function in a similar manner, such as proprietary store credit cards, often have minimal credit score criteria. This may make it simpler for folks with low or bad credit histories to get a CareCredit card.

Is There an Annual Fee fore CareCredit?

No. There are, however, late fees if you miss a payment.

How Is CareCredit Different From a Regular Credit Card?

CareCredit is a credit card intended exclusively for health and wellness needs. It can’t be used anyplace or for anything. It is instead meant to cover medical expenditures at different hospitals, veterinary clinics, dentistry facilities, and private medical practice organizations, as well as health care-related stores and pharmacies. According to the firm, this equates to around 250,000 suppliers in total. 1

The financing parameters of the card are often different from those of a standard credit card. It functions as a short- or long-term loan rather than a continuous, revolving credit line with interest costs. If you do not pay the whole debt before the conclusion of the promotional period, interest begins to accumulate as of the charge date. 12

Is It Worth It to Get a CareCredit Card?

It can be, particularly if you have a big medical bill that isn’t covered (or is only partially covered) by your health insurance and the provider doesn’t take credit cards. CareCredit, on the other hand, works more like a loan than a credit card. It provides payment plans of varied lengths in which you make minimal monthly payments to the loan. During that period, you don’t pay any interest, but if you haven’t paid off the full debt by the end of the term, you’re charged interest at a high rate (currently 26.99%) retrospectively from the purchase-of-service date—on your entire initial balance, in other words. 1

The Bottom Line

Medical credit cards help to make medical bills more bearable. Of course, users must keep in mind that the funding for these credit cards is supplied by for-profit firms looking to earn money. If you’re not cautious, you might end yourself paying a lot of money in fees.

Health care-related credit cards, like other credit cards, should be used with caution and responsibility since failing to follow the conditions of the account agreement will be reported to credit agencies and will harm your credit score. This involves reading the fine print and fully comprehending the terms and accompanying costs.

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