Medical Credit Cards & Loans Drive Up Patient Debt

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Last updated on September 6th, 2023

A new Consumer Financial Protection Bureau research report finds medical credit cards and loans with deferred installment payments are driving up debt for patients and their families. Here’s what you need to know.

Patients Targeted For Medical Credit Card Signups

Medical costs in the U.S. can be expensive for patients. A recent report from the Consumer Financial Protection Bureau (CFPB) shows patients are getting pushed to opt for costly medical credit cards and loans to cover their medical bills. The CFPB research uncovers recent findings for high-cost specialty financial products, including how patients attempt to alleviate medical costs.

To ease the stress of medical bills, Americans seem to turn to credit cards. However, the credit card options they are turning to are not the conventional cards you might use for everyday purchases. Instead, patients are being guided, most of the time by medical establishments, to use financial specialty products, like medical credit cards. Interest rates on financial specialty products typically reach atop 25%. In return, the outcome of using medical credit cards may carry added stress for medical bills such as decreased access to credit, collection litigations, and increased potential for bankruptcy.

Designing Costly Loan Products

“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.” Source.

According to the report, fintech companies continue to create an increasing number of financial products for patients. It is essential to note that most of the terms for medical credit cards and installment loans have interest rates much higher than those of traditional credit cards, which range from 26.99% to 16%. Due to the nature of the medical loans’ deferred interest plans, patients can get stuck with a pile-up of high-interest, typically due at the end of a defined period. As a result, patients experience the stress of medical bills that are too expensive and unaffordable.

From 2018 to 2020, patients and their families have used specialty medical credit cards or loans (with deferred interest periods) to pay nearly $23 billion in healthcare expenses – for more than 17 million medical purchases. These are all payments for individual services ranging from as low as $35 to as high as $40,000. These large numbers include various healthcare services like basic medical care, lab work, medications, dental, and more.

CFPB research findings:

  • Medical financing companies market their products directly to healthcare providers
  • Patients need guidance on terms and risks
  • Patients can get stuck with ballooned deferred interest and lawsuits

To view the full report, click here.

Overall, patients need additional assistance when choosing a payment plan for their medical expenses. Healthcare providers are pitching different payment options to patients even though they may not have the proper training to help guide them toward the more affordable option. As a result, patients get handed inflated repayment rates, which can lead to lawsuits pursued by creditors, otherwise not pursued by healthcare providers. Healthcare providers may be more inclined to offer specialty payment options to patients because financial firms market their products as less risky for the provider.

Related Article: The Best Credit Cards For Health & Wellness

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About: Jeannyn Gomez
Jeannyn Gomez

Jeannyn is the Content Management Assistant for In addition to serving on all aspects of social media and spreading the word on expert credit and personal finance advice, Jeannyn finds herself on quests for humor, supernatural phenomena, and conspiracy theories for fun.

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