The cost of healthcare in the United States is a major financial burden for many people. In fact, medical debt is the leading cause of personal bankruptcy in the country. In recent years, there has been a growing trend of medical debt credit cards being offered to patients. These cards allow patients to finance their medical bills, but they often come with high interest rates and fees.
The Consumer Financial Protection Bureau (CFPB) is concerned about the risks associated with medical debt credit cards. In a 2022 report, the CFPB found that these cards can lead to higher costs for patients, as well as increased risk of debt collection and bankruptcy.
The CFPB’s report highlighted the following risks associated with medical debt credit cards:
- High interest rates and fees. Medical debt credit cards often have high interest rates and fees, which can make it difficult for patients to repay their debts.
- Loss of negotiating power. When patients use a medical debt credit card, they may lose their ability to negotiate with their healthcare providers for a lower price.
- Aggressive debt collection practices. Medical debt collectors may use aggressive tactics to collect debts, such as calling patients at work or threatening to sue.
- Loss of credit reporting protections. Patients who use a medical debt credit card may lose the protections that are typically afforded to medical debt, such as the ability to have the debt removed from their credit report after seven years.
If you are considering using a medical debt credit card, it is important to carefully weigh the risks and benefits. You should also compare different cards to find one that has the lowest interest rate and fees. If you already have medical debt, there are several resources available to help you repay it. You may be able to negotiate a lower price with your healthcare provider, or you may be eligible for financial assistance programs. You can also contact a credit counselor for help.
The CFPB’s report on medical debt credit cards is a valuable resource for consumers. It provides valuable information about the risks of these cards and how to protect yourself. If you are considering using a medical debt credit card, we encourage you to read the report and consult with a financial advisor before deciding.
- Consumer Financial Protection Bureau: https://consumerfinance.gov
- National Consumer Law Center: https://www.nclc.org/
- Debt.org: https://www.debt.org/
- National Foundation for Credit Counseling: https://nfcc.org/
Here are some things that healthcare providers can do to address these concerns:
- Be transparent about the risks of medical debt credit cards. Healthcare providers should make sure that patients understand the terms and conditions of these cards, including the high interest rates and fees. They should also explain that patients may lose their ability to negotiate with their healthcare providers for a lower price if they use a medical debt credit card.
- Offer alternative payment options. Healthcare providers should offer patients other payment options, such as payment plans or financial assistance programs. This will give patients more choices and help them avoid the high interest rates and fees associated with medical debt credit cards.
- Work with patients to develop a payment plan. If a patient does choose to use a medical debt credit card, healthcare providers should collaborate with them to develop a payment plan that they can afford. This will help to ensure that the patient can repay the debt without incurring additional fees.
- Refer patients to financial counseling services. If a patient is struggling to repay their medical debt, healthcare providers should refer them to financial counseling services. These services can help patients develop a budget and create a plan to repay their debt.
By taking these steps, healthcare providers can help to protect patients from the risks associated with medical debt credit cards.
In addition to the above, healthcare providers can also:
- Educate patients about their rights. Patients have rights under the Fair Credit Reporting Act (FCRA). Healthcare providers should educate patients about these rights, including the right to dispute inaccurate information on their credit reports.
- Work with debt collectors to resolve disputes. If a patient disputes a medical debt, healthcare providers should work with debt collectors to resolve the dispute. This will help to ensure that the patient’s credit report is accurate.
- Advocate for changes to the healthcare system. The high cost of healthcare is a major factor that contributes to medical debt. Healthcare providers can advocate for changes to the healthcare system that would make healthcare more affordable for patients.
In doing so, healthcare providers can help to address the CFPB’s concerns about medical debt credit cards and help patients to avoid the financial hardship of medical debt.