STamford-based Synchrony Financial and San Francisco-headquartered Wells Fargo received an open letter from five senators known for their progressive policies asking for clarification on the issue of medical credit cards.
The letter, signed by Connecticut’s Christopher Murphy as well as Bernie Sanders of Vermont, Sherrod Brown of Ohio and Elizabeth Warren and Edward Markey representing Massachusetts, outlined a number of concerns including credit cards and ask a series of questions about business.
Medical credit cards can be used to pay for medical treatment, but it’s a growing financial option to deal with rising health care costs. . CareCredit, offered by Synchrony, is one of the most popular options, with more than 12.7 million cardholders. The letter from the senators stated that according to US Securities and Exchange records, Synchrony collected 15% of the total salary in 2021 from the Health and Wellness sector, up to to $2.3 billion a year with $4.2 billion in total revenue.
“CareCredit is different from a regular credit card,” reads the card’s website. “Use it to pay for out-of-pocket expenses not covered by medical insurance, and special financing options are available that you may not be able to get with other cards.”
Wells Fargo offers the Wells Fargo Health Advantage Card, which is limited to medical use. However, the Wells Fargo Health Advantage Card can be used for eye surgery, hearing care, dental care and pet care. Synchrony’s CareCredit can be used for a wide range of procedures, including those related to weight loss and cosmetic surgery, as well as i and a general category “other”.
Placing medical payments on credit cards can allow the uninsured or those in need of treatment not covered under the their plans pay early for treatment or medication. The cards also offer discounts and lower APRs when certain conditions are met, which can be attractive to customers. Hospitals appreciate the speed and ease of payment.
However, the senators’ letter questioned the circumstances in which the buyers are making the decision.
“The concern here is that the current structure of our health care system often requires patients to incur medical debt in order to get the services they need,” the letter said. . “In that situation, patients – often motivated by concerns about their medical care – are pushed into and then locked into credit cards even though there are other ways to pay. which may be more profitable and offer lower interest rates.”
The letter also pointed to reports of patients paying more in interest than the cost of the procedures they received, APRs as high as 26.99%, and some cards that increase as soon as they are approved. eat The book says that patients who use these cards often pay a very high rate of “chargemaster”, which is often used by doctors as a starting point in negotiations with patients and insurance companies but rarely found.
“If you pay 0% interest on a very high loan, it’s not a good thing,” the letter continued.
The senators also raised concerns about the rise in subprime debt, and expressed concern that medical credit cards may be different from credit scores, writing: “Cards can also affect credit reports of customers because of the way they treat their credit reports. agencies: the agencies recently agreed to remove 70% of medical debt from credit reports, but these changes will not benefit credit card holders.”
The letter ended by asking Synchrony Financial and Wells Fargo to answer 16 questions ranging from personal information to the number of specific credit card users and partners to the terms of approved transactions with health care providers.
At the time of this writing, Senator Murphy’s office or Wells Fargo have not returned requests for comment.
The representative of Synchrony said that the company will provide more information on January 26 or January 27, after working with the senators who previously requested information on January 12.