How Does CareCredit Work?

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

One of these credit lines is CareCredit, which is a division of Synchrony Financial (SYF). As one of the largest providers of private-label credit cards in the U.S., it has agreements with a broad range of health care providers that will accept its card as payment. The card is currently accepted by over 250,000 health care providers across the United States.

These cards can offer a convenient way to pay your medical bills but at a significant cost. Using CareCredit can cost money if you don't pay off your balance in full by the end of your initial promotional period.

Key Takeaways

  • Synchrony's CareCredit has agreements with a broad range of health care providers that accept its credit card.
  • Synchrony is one of the largest providers of private-label credit cards in the U.S.
  • The card covers traditional medical insurance copayments​ on covered services and covers elective medical procedures that traditional insurance plans do not cover.
  • There is no annual fee for CareCredit.
  • It is important for consumers to keep in mind that CareCredit can be an expensive way to pay for medical bills if you can't pay back your balance during the promotional period.

How CareCredit Works

In some sense, the CareCredit card works just like a regular credit card. The only difference is that you can only use it 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.

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.

Financing Options

Consumers who use the CareCredit card are eligible to participate in short-term financing offers that enable them to make payments over six, 12, 18, or 24 months. There are no additional interest charges as long as they spend at least $200 and pay the full bill within the agreed-upon 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%.

Be aware, though, that the indicative annual percentage rate (APR) on these cards is much higher, at 26.99%. lt also offers longer-term health care financing for 24-, 36-, 48-, or 60-month periods, at APRs ranging from 14.9% to 17.9%. Late fees range from $15 to $39 per statement period if you fall behind.

How to Apply for CareCredit

You can pre-qualify for CareCredit online by using its online service at

If you don't want to go online, you can apply over the phone using the company's toll-free number: 1-800-677-0718. There is an automated system available 24/7 or you can apply with a live agent between 9 a.m. and 9 p.m. ET, Monday through Friday.

You can also apply in person at more than 250,000 health care providers and select retail locations that accept CareCredit. CareCredit does not accept applications via fax or email.

Synchrony does not specify how it assesses applications or what the requirements are for their credit cards.

CareCredit Requirements

CareCredit allows anyone to check if they qualify for a card. This option won't affect your credit score. In order to apply, you will need to provide Synchrony with the following information:

  • Name
  • Address
  • Date of birth
  • Social Security number (SSN) or individual taxpayer identification number (ITIN)
  • Net income
  • Housing Information

CareCredit Limits

The credit limit on your CareCredit card is determined by your credit history. The minimum purchase on these cards is $200, and the maximum credit limit for those with a good credit score is $25,000.

High credit limits, combined with the ease with which CareCredit cards can be obtained, means that they can be a good way for people with a poor credit history to pay for medical bills. Be warned, though, that CareCredit cards can be expensive if you aren't able to make your repayments on time.

You can split the payment by paying for part of your services or treatment with cash and the CareCredit card.

Risks of CareCredit

CareCredit's marketing pitches focus on providing access to affordable health care to its consumers. But it's important to remember that CareCredit (and similar health care credit card companies) are in business to make a profit. They offer no-interest financing and count on many consumers overextending themselves and being unable to pay their bills in full. Those who fall into this situation often end up with expensive financing charges.

Branded medical credit cards are essentially an unsecured line of credit offered by some health care providers. The card isn't actually part of the Visa and Mastercard payment network, so it can't be used for everyday purchases. Rather, it's 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.

Criticism of CareCredit

According to the Consumer Financial Protection Bureau (CFPB), CareCredit "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. This means if cardholders can't pay the debt in full by the end of that period, they must pay 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. As a result, 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 rate) are not available through every provider. Cardholders should check with their provider to determine the available options. 

CareCredit advises cardholders that "with this type of promo financing, which may be advertised as no interest if paid within 12 months, or however long the agreed-to promotional period lasts, your card issuer will waive the interest you accrue if you pay your balance in full by the end of the promotional period. However, since interest accrues from the date of purchase or balance transfer; if you don't pay off the balance in full by the end of the promotional period, that accrued interest will be assessed and added to your balance."

Alternatives to CareCredit

If CareCredit doesn't sound appealing, there are alternatives to help pay for health care. 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 grows tax-free until you use it for qualified health care 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 generally have to use up all the funds 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 charges 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.

What Credit Score Is Needed for CareCredit?

Synchrony doesn't specify what credit score is needed to qualify for CareCredit, and it doesn't tell customers which credit bureau it uses to get credit reports. Cards that work in a similar way, such as proprietary store credit cards, generally have low requirements when it comes to credit scores. This may make it easier for people with limited or poor credit history to be approved for a CareCredit card.

Is There an Annual Fee fore CareCredit?

No. There are, however, late fees if you miss a payment.

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 health care-related retailers and pharmacies. According to the company, this amounts to some 250,000 providers in all.

The card's financing terms tend to be different from those of a regular credit card. Instead of an ongoing, revolving credit line and interest charges, it acts as a short- or long-term loan. Interest accrues retroactively as of the charge date if you don't pay the full balance by the end of the promotional period.

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.

The Bottom Line

Health care 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, health care-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.

Article Sources
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