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Antidote to CFPB’s ‘Bad Prescription’



The average American holds more than $5,000 in medical debt, and that figure continues to rise. As medical debts are often unforeseen, it catches modest- and low-income people off-guard, unprepared to pay for the necessary treatments.


CUToday.com published an article summarizing a recent Consumer Financial Protection Bureau (CFPB) report that found fault with medical loan plans and credit cards, assessing that the issuers of these products charge much higher interest than standard credit cards and can have complicated terms.


The rising cost of medical care has made these products essential for serving those who need medical care but cannot afford to pay for it immediately out of pocket. According to a survey by LendingTree, 30% of millennials have medical, the highest percentage among the generations. Also, those earning less than $35,000 per year were most likely to have medical debt. The Centers for Medicare and Medicaid Services found that Americans’ healthcare spend in 2021 totaled more than $4.3 trillion, or 20% of GDP. That includes thousands of dollars per household on health insurance premiums and even more on deductibles, only for marketplace health insurances to deny 20% of all claims. And that’s if people have insurance at all.


Medical credit cards make treatments possible that patients might otherwise forgo, exacerbating their health issues, and do so in a way cardholders can pay back over time to suit their individual needs. Certainly, some are more consumer friendly than others. Credit unions should be particularly diligent before offering medical credit cards to ensure they are promoting products that increase members’ trust that they are looking out for them and their families.


Here are some characteristics of a responsible medical credit card:

  • Easy to use

  • Widely accepted

  • Clear borrowing terms

  • Payment flexibility

  • Fair rate

  • Provides financial counseling and advocacy assistance

  • Keep it in a CUSO!

Medical loan companies market directly to healthcare providers, so consumers already trust them to provide medical care. Unfortunately, however, they are not necessarily the best at providing financial guidance. Ultimately a finance company will manage the account, which frequently comes with complicated terms as the CFPB described in its report. This is often intentional to keep the patients – many of which are your members – paying and paying for years to come.


Credit union employees, on the other hand, are solid, trustworthy information resources for members’ financial questions. They’re always there to help. Particularly in times of stress, when families aren’t necessarily thinking clearly, it’s good to have a budget-friendly medical credit card payment option in their back pocket even before a health issue occurs. Some cards offer rewards just like general purpose credit cards. Just make sure it’s the right medical credit card: yours.

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