Healthcare is expensive. In addition to rent or mortgage payments, healthcare costs can be one of the biggest monthly budget items for many individuals.

Paying medical bills can be a financial burden and a significant challenge. A while back, a variety of well-known lenders and healthcare companies—including GE Capital, JPMorgan Chase, Citigroup, Capital One, UnitedHealth Group, and Humana—launched credit cards designed to help pay for the high costs of healthcare. Though many of these firms have since stopped participating in the program, revolving credit lines for use to cover healthcare costs are still available to consumers.

Branded medical credit cards are essentially an unsecured line of credit offered by some healthcare providers. The card isn't part of the Visa and Mastercard payment network so it can't be used for everyday purchases. It's often a way for doctors to allow patients to finance elective procedures that are not covered by insurance, like cosmetic surgery. Akin to private label retail store credit cards, these products generally have limited usage options and higher long-term interest rates compared with general use credit cards.

Key Takeaways

  • Synchrony's CareCredit has entered into agreements with a broad range of healthcare providers that will accept its credit card as payment for their services.
  • Synchrony is one of the largest providers of private label credit cards in the U.S.
  • The card can be used to cover traditional medical insurance copayments​ on covered services; it can also be used for elective medical procedures that are not covered by traditional insurance plans.
  • It is important for consumers to keep in mind that CareCredit—and other similar healthcare credit card companies—are in business to make a profit.

How CareCredit Works

CareCredit is a division of Synchrony Financial (SYF). Synchrony is one of the largest providers of private label credit cards in the U.S.

Synchrony's CareCredit has entered into agreements with a broad range of healthcare providers that will accept its card as payment for their services; the card is accepted by over 200,000 healthcare providers in the United States.

The card can be used to cover traditional medical insurance copayments​ on covered services. The card can also be used for elective medical procedures that are not covered by traditional insurance plans. Some of the medical procedures and wellness services that the card can be used for include vision care, cosmetic surgery, dermatology services, dental services, and hearing care.

The providers range from doctors, dentists, and surgical centers to vision care and hearing centers, hair restoration, and even veterinary services. CareCredit cardholders can go to the CareCredit website and enter a zip code to find local providers that take the card.

By paying with the CareCredit card, consumers are eligible to participate in short-term financing offers that enable them to make payments over six, 12, 18, or 24 months. In addition, there are no interest charges as long as they spend at least $200 and pay the full bill within the agreed-on time period. Extended time periods up to 60 months for minimum purchase amounts of $2,500 are also available, with interest rates as low as 17.9%.

CareCredit Is in Business to Make a Profit

Though their marketing pitches focus on providing access to affordable healthcare, it is important for consumers to keep in mind that CareCredit—and other similar healthcare credit card companies—are in business to make a profit.

They offer no-interest financing, counting on many consumers overextending themselves and being unable to pay their bills in full, thus incurring expensive financing charges. They may also count on consumers misunderstanding the terms.

According to the Consumer Financial Protection Bureau (CFPB), CareCredit has "misled some consumers during the enrollment process by not providing adequate guidance clearly laying out the terms of the deferred-interest loans." Such loans assess interest starting from the date of purchase throughout the promotional period; if cardholders fail to pay the debt in full by the end of that period, they must pay all the accrued interest (not just interest on the remaining balance).

In 2013, CFPB ordered CareCredit (at that time, CareCredit was a subsidiary of GE Capital) to refund $34.1 million to cardholders. In response, the firm created a CareCredit Certification with its providers "in an effort to ensure that every CareCredit card applicant is given a clear, easy-to-understand explanation of financing options available."

However, the firm's "promotional financing options"—the ones with no interest, or a relatively low interest rate—are not available through every provider. Cardholders should check with their provider to determine the available options. 

CareCredit also advises cardholders that "paying only the minimum due on your account each month may not pay off your balance before the end of the promotional period" and to contact the company to ensure that you are paying the correct amount "to take advantage of your special financing promotions."

Complexities like this are not limited to CareCredit’s offerings. A medical credit card survey by a group called Consumer Action found similar practices by other healthcare credit card providers.

How Is CareCredit Different From a Regular Credit Card?

CareCredit is a credit card specifically designed for health and wellness needs. You can't use it anywhere or for anything; rather, it's intended to pay for medical expenses at various hospitals, veterinary clinics, dental centers, and private medical practice firms, along with healthcare-related retailers and pharmacies: some 225,000 providers in all.


Also, the financing terms tend to be different from a regular credit card's. Instead of an ongoing, revolving credit line and interest charges, CareCredit offers financing options of six, 12, 18, or 24 months; no interest is charged on purchases of $200 or more when you pay the full amount due by the end of the period. If you do not, interest is charged from the original purchase date, at an annual percentage rate (APR) that can be as high as 26.99%. lt also offers longer-term healthcare financing for 24-, 36-, 48-, or 60-month periods, at APRs ranging from 14.9% to 17.9%.

Is It Worth It to Get a CareCredit Card?

It can be, especially if you incur a major medical expense that's not covered (or not sufficiently covered) by health insurance, and the provider doesn't accept credit cards. However, CareCredit functions more like a loan than a credit card. It offers payment plans of varying durations, during which you make minimum monthly payments toward the debt. You don't pay any interest during that time, but if you haven't paid off the entire balance by the end of the term, you're charged interest at a steep rate (currently 26.99%) retroactively from the purchase-of-service date—on your entire original balance, in other words.


For that reason, it's generally always better to use a regular credit card, especially if has a 0% APR intro offer—or even if it has a lower APR than CareCredit's current 26.99%, which many cards do. And of course, regular credit cards can be used in more places, and offer cash back or rewards, too.


CareCredit probably is easier to get than a regular credit card, though—one of the reasons its interest rates are higher. For larger expenses—$1,000 and up—CareCredit does offer longer-term plans at rates that are somewhat more competitive.

What Are Some Alternatives to CareCredit?

First, check to see if your provider privately offers some sort of pay-over-time arrangement. Many large practices and facilities have repayment plans that don't charge interest or fees as long as you pay regularly.


If it's available through your health insurance plan, consider establishing a Health Savings Account (HSA): You contribute money on a pretax basis—usually taken out of your paycheck—and your money gets the chance to grow tax-free until you use it for qualified healthcare expenses. If you're on your employer's group insurance plan, there's a similar tax-advantaged account, the flexible spending account (FSA)—but you usually have to use up all the funds in it within the year you contribute them.


Because CareCredit functions somewhat like a loan, with a set repayment period, you might consider just taking out a personal loan from a bank or credit union instead. You'll pay interest along the way, but it's likely to be at a lower rate than the interest charged by CareCredit if you don't settle your entire debt by the period's end.


Finally, consider using a regular credit card as an alternative to CareCredit. If you see a card offering a 0% APR promotion, consider applying for it to use in payment of your medical bills. The minimum payments may well be lower. These promo periods often extend for 18 or 24 months, which are as long as CareCredit's. And even if you haven't paid in full by the time the promo ends, you'll probably incur a lower interest rate—and just on the remaining balance, too.

The Bottom Line

Healthcare credit cards provide a way to make medical expenses more manageable. Of course, consumers must remember that the financing behind these credit cards is provided by for-profit companies that are in business to make money. If you're not careful, you can incur significant expenses from the associated fees. Like all credit cards, healthcare-oriented credit cards should be used in a cautious and responsible manner because failure to abide by the terms of the account agreement will be reported to credit bureaus and hurt your credit score. This includes reading the fine print and having a complete understanding of terms and associated expenses.