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The US Consumer Financial Protection Bureau, Department of Health and Human Services and the Treasury Department sent out a request for information Friday, seeking to learn more about how prevalent the products are and whether they can harm consumers with features such as exorbitant deferred interest fees.
“Financial firms are partnering with health-care players to push products that can drive patients deep into debt,” CFPB Director Rohit Chopra said in a statement.
The agencies didn’t single out any banks or others involved in the industry. The CFPB has previously said that the top providers of medical credit cards include CareCredit, a subsidiary of Synchrony Financial; Wells Fargo & Co., which offers its “Health Advantage” card, and Comenity, a subsidiary of Bread Financial Holdings Inc.
“CareCredit’s convenient and transparent financing options make health and wellness care more affordable and expand consumers’ access to things like dental work, pet care or audiology,” a spokesperson for CreditCare said in an emailed statement. “Our financing offers have been around for decades, are well understood by consumers, and have saved our cardholders billions of dollars in interest-free financing over the years.”
Wells Fargo’s market share in the business is less than 1%, a representative for the San Francisco-based bank said in an emailed statement.
“We review an applicant’s ability to repay before approving any application,” the representative said. “All rates and terms are disclosed at application, and the maximum interest rate a customer will ever pay is 12.99%. Most of our customers pay off their balances without paying any interest.”
A representative for Bread Financial didn’t respond to a request for comment.
The products were once primarily used to pay for medical treatments that health insurance didn’t cover, but are now more widely used to manage debt, and may be utilized even when insurers cover the bill, according to the statement. Some include deferred interest offers which, while appealing in the moment, could eventually harm a consumer’s credit if payments are missed, the agencies said.
Medical debt in the US has ballooned in recent years, and is a leading source of consumer credit. After the CFPB said last year that it would examine the impact of such debt on consumer credit, the main credit-reporting companies — TransUnion, Equifax and Experian — removed more than 70% of existing medical-debt entries from consumer reports.
In Friday’s statement, the agencies said they are specifically requesting public input on the payment-product market, patient experiences with the products, billing issues and health-care provider incentives.