ALBANY, N.Y. (AP) — GE Capital Retail Bank's CareCredit LLC subsidiary will add consumer protections to its health care credit card — which can carry interest rates of nearly 27 percent — under a settlement announced Monday by the state attorney general's office.
GE Capital Retail Bank issues the CareCredit card and contracts with about 160,000 health care providers nationwide who offer it to patients to finance treatment.
State Attorney General Eric Schneiderman said the agreement limits charges by dentists, doctors or other health care providers in advance and requires clearer disclosure of the higher interest rates that kick in if charges are not paid off at the ends of promotional periods. The settlement ended an investigation by the office's Health Care Bureau that followed consumer complaints.
"The explosion of medical credit card debt is a major concern for many New Yorkers, particularly low- and middle-income households and vulnerable seniors," Schneiderman said. "The problem is made even worse by those who encourage high-pressure sales tactics in our health care settings and companies who charge outlandishly high interest rates."
GE Capital said CareCredit has worked with the attorney general's office over the past three years to resolve its concerns.
"As it has for 26 years, CareCredit remains committed to providing credit and financing options to New York residents and millions of families across the U.S. that enable them to plan and pay for elective healthcare procedures," GE Capital communications vice president Dori Abel said in a written statement.
According to the settlement agreement, CareCredit is the largest issuer of consumer health care financing in the U.S.; dental practices comprise approximately 60 percent of its business and about 65 percent of the card consumers apply in their dental or medical offices. CareCredit has authorized about 7,800 health care providers in the state to accept the card, which has been issued to more than 535,000 New York residents.
The company offered two financing options: Consumers paid no interest if they paid off their balances in full within the deadline of six, 12, 18 or 24 months or paid a rate of 14.9 percent with fixed monthly payments.
While 90 percent of consumers chose the no-interest option, one-quarter of those failed to pay off their balances in time and were hit with the 27 percent interest rate, frequently because they didn't understand the terms, the agreement said, citing Schneiderman's findings.
"These problems are more acute when providers charge the entire treatment plan up front, even before starting treatment," the agreement said.
The agreement also said that CareCredit "will not give kickbacks, rebates, compensation, or in-kind services" to any health care provider in exchange for its success in generating card business.