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Medical credit cards take advantage of vulnerable borrowers

Imagine sitting in the chair at the dentists office and being told you need a costly procedure to remove unhealthy teeth or repair damaged dental work. Now imagine that the procedure you need is not covered by insurance and is otherwise unaffordable. Enter the medical credit card, a way of paying for dental work and other procedures with a line of credit. Now imagine that this credit card is pitched to you by your doctor.

Many patients who agree to the lines of credit are confused about the terms and in some cases even who they are agreeing to pay in installments. Reporters found that many patients believed that they were entering into a payment plan directly with their doctors or dentists rather than with a third party credit company.

Medical credit cards might seem like a good way to get care that you need now and find a way to make the payments later, but missing just one payment can lead to a slew of new financial difficulties when a higher interest rate and penalties kick in. Unfortunately that is not the way these plans are marketed to most patients who are approached to sign up for them right in the doctors office after a diagnosis or recommendation for immediate care has been made.

The fee structure resembles traditional credit cards with a grace period of no-interest followed by an annual interest rate around 24 percent. The crucial difference is the timing of when a consumer normally opens a credit card versus when they’re confronted with a medical credit card. The stress of a new diagnosis and the the need for treatment not covered by insurance is a stressful situation, putting potential borrowers in a vulnerable position.

When credit companies take advantage of consumers in this way or otherwise engage in unfair lending or collections practices, consumers do have options to fight for their rights. Dealing with these companies alone and in the wake of a stressful medical situation can be difficult, so many borrowers find it helpful to engage an experienced debt relief attorney to help with the process and make sure that creditors are kept at bay.

Source: New York Times, "Patients Mired in Costly Credit From Doctors," Jessica Silver-Greenberg, Oct. 13, 2013. 

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