CONSUMER 

FINANCE

Credit Cards 

Designed for Medical 

Services Not Covered 

by Insurance

Report to Congressional Requesters

June 2014

GAO-14-570

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-14-570, a report to 

congressional requesters

June 2014

CONSUMER FINANCE

Credit Cards Designed for Medical Services Not 

Covered by Insurance 

Why GAO Did This Study

Medical credit cards and related 

products (such as installment loans) 

are offered by financial institutions 

through participating providers to pay 

for services not covered by health 

insurance, such as dental and 

cosmetic procedures, or for veterinary 

care. Medical credit cards received 

increased attention after enforcement 

actions in 2013 against GE Capital 

Retail Bank in relation to its CareCredit 

product. 

GAO was asked to review the 

marketplace for medical credit cards

and related products. This report 

describes the participants and products 

in this marketplace. To address these 

objectives, GAO conducted a literature 

review and reviewed websites, product 

terms and conditions, and other 

publicly available information. GAO 

also interviewed staff of, and collected 

documents from, CFPB, 14 card 

companies representing a mix of size 

and type, and organizations that 

represented participating providers, 

financial institutions, and consumer 

interests and were familiar with the 

medical credit card marketplace. GAO 

also reviewed settlement agreements 

between CareCredit and CFPB and the 

New York Attorney General. 

What GAO Recommends

GAO makes no recommendations in 

this report. 

What GAO Found

Multiple entities offer medical credit cards, but according to market participants

with whom GAO spoke, CareCredit LLC issues the majority of medical credit 

cards. In 2013, the company reported 4.4 million cardholders and 177,000 

participating providers in its network, the majority of which were dental offices. 

Several other financial institutions also issue medical credit cards, usually 

offering their own branded product, but sometimes providing financing for retail 

networks or third-party companies that offer and market cards under their own 

names (see table). The marketplace for financing services not covered by health 

insurance also includes companies that assist providers in offering their own 

payment plans and websites that largely serve a marketing function by directing

consumers to others’ products. In 2013, GE Capital Retail Bank and its affiliate 

CareCredit entered into separate agreements with the New York Attorney 

General and the Bureau of Consumer Financial Protection (known as CFPB), 

which had alleged deceptive card enrollment processes, including failure to 

provide disclosures and inaccurate information given by participating providers to 

consumers. Both settlements required CareCredit to make several changes to its 

practices, such as enhancing consumer disclosures. 

Participants in the Market for Medical Credit Cards and Related Products

Role Examples Description

Card issuers CareCredit

Citibank

Wells Fargo

Comenity

Financial institutions that issue medical credit cards, 

financing the loan and managing the account.

Aggregators Springstone

American HealthCare

 Lending

Companies that offer co-branded card or installment 

loans, often marketed through participating providers. 

Partner with issuer that finances and services the loans. 

Participating

providers

Individual dental,

 veterinary, or

 chiropractic offices

Providers that offer their clients a card branded under the 

card issuer’s or aggregator’s name. 

Retail networks Ideal Image

American Laser 

 Skincare

Networks or chains of participating providers that offer 

their clients an issuer’s card branded under the network’s

or chain’s company name. 

Source: GAO. | GAO-14-570

Medical credit cards from large banks offer a revolving line of credit with an 

established credit limit—akin to a conventional credit card—with some form of 

promotional financing (special terms and conditions, which are valid for a 

specified period of time). The most commonly used financing option is deferred

interest, with no interest charged for a promotional period but interest charged 

retroactively if the balance is not paid in full before the end of the promotional 

period, usually 6 to 24 months. Among large banks GAO reviewed, as of May 

2014, the most commonly used products had an annual percentage rate (APR) 

of 26.99 percent or more. Alternatively, these banks also offered revolving credit 

with fixed monthly payments, with an APR of 0 to 17.99 percent. Installment 

loans or products targeted at consumers with poor credit histories were offered 

by certain other market participants. View GAO-14-570. For more information, 

contact Cindy Brown Barnes at (202) 512-

8678 or brownbarnesc@gao.gov. 
Page i GAO-14-570 Medical Credit Cards

Letter 1 

Background 2

One Company Appears to Issue the Majority of Medical Credit 

Cards 5

Medical Credit Cards Commonly Offer Revolving Credit with 

Deferred Interest 10

Agency Comments and Our Evaluation 12

Appendix I Objectives, Scope, and Methodology 14

Appendix II GAO Contact and Staff Acknowledgments 17

Tables

Table 1: Participants in the Market for Medical Credit Cards and 

Related Products, as of May 2014 6

Table 2: Characteristics of Selected Medical Credit Cards, as of 

May 2014 11

Abbreviations

APR annual percentage rate

CFPB Bureau of Consumer Financial Protection

FTC Federal Trade Commission

Contents

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

copyrighted images or other material, permission from the copyright holder may be 

necessary if you wish to reproduce this material separately.
Page 1 GAO-14-570 Medical Credit Cards

441 G St. N.W.

Washington, DC 20548

June 19, 2014

Congressional Requesters

More than 4 million consumers use medical credit cards and related 

products, including medical installment loans and lines of credit, to pay for 

procedures that health insurance generally does not cover, such as 

dental, hair removal, and cosmetic procedures, or for veterinary care. 

Although consumers may have other options to pay for these 

procedures—including conventional credit cards or setting up payments 

through their doctor’s office—some choose to use medical credit cards to 

take advantage of promotional offers, keep credit available on other 

cards, or because they do not have advantageous financing alternatives. 

Financial institutions offer medical credit cards through participating 

providers to consumers (patients).1 Medical credit cards received 

increased attention after enforcement actions in 2013 by the New York 

Attorney General and the Bureau of Consumer Financial Protection 

(known as CFPB) that led to settlement agreements with GE Capital 

Retail Bank and its affiliate CareCredit LLC in relation to the CareCredit 

medical credit card.

You asked us to review the marketplace for third-party consumer financial 

products used to cover procedures not typically covered by health 

insurance—products this report refers to collectively as medical credit 

cards. The objectives of this report are to describe the (1) participants and 

(2) products in the marketplace for medical credit cards. To address these 

objectives, we conducted a literature review, and reviewed websites, 

public filings, product terms and conditions, and information provided to 

us by card companies. We interviewed or corresponded with 

representatives of CFPB and the Federal Trade Commission (FTC); 14 

card companies selected because they represented a mix of size and 

type; a trade organization representing financial services companies; and 

 

1

For the purposes of this report, we use “medical credit cards” to refer collectively to 

financial products—including revolving credit lines and installment loans—that are 

designed specifically to finance health care services not covered by health insurance. 

They may or may not involve the issuance of a plastic card associated with the extension 

of credit. We use “card companies” to refer to companies that provide these financial 

products, and we use “participating providers” to refer to the providers or offices of health 

care, veterinary, or other services that make these products available to their patients or 

clients. 
 

Page 2 GAO-14-570 Medical Credit Cards

selected organizations that represent health care providers or consumer 

interests and are familiar with the medical card marketplace. In addition, 

we conducted two group interviews, coordinated by the National 

Association of Attorneys General, that together included staff from the 

office of the attorney general of nine states, and spoke separately with the 

Minnesota Office of the Attorney General. A more extensive discussion of 

our scope and methodology appears in appendix I.

We conducted this performance audit from July 2013 to June 2014 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

Medical credit cards are private-label credit cards that may be used 

across a network of participating providers (such as dental offices or 

veterinary clinics) that have contractual relationships with the card 

company.2 Consumers typically learn about medical credit cards, or 

related products such as installment loans, from participating providers, 

who give information about the product and the available financing 

options. Consumers often can apply immediately at the provider’s office, 

sometimes with the assistance of the office staff, either online, by 

telephone, or using a printed application. The card company determines 

eligibility and, if the application is approved and an account is opened, is 

required to provide the consumer with the account-opening disclosures 

with the full terms and conditions, including fees, percentage rates, and 

rate terms. Once enrolled, consumers generally interact with the card 

company—rather than the participating provider—regarding use of the 

card, and they direct their payments to the card company.

Medical credit cards can be used to pay for elective (planned, 

nonemergency) services, such as dental and orthodontic procedures, eye 

correction surgery, audiology care, cosmetic procedures, and hair 

removal or restoration, as well as for veterinary services. Some medical 

 

2

Private-label credit cards are used primarily to buy goods and services only within 

specified retail or provider networks.

Background
 

Page 3 GAO-14-570 Medical Credit Cards

credit cards also may be used to pay for insurance copayments and 

deductibles or to finance medical care for people who do not have health 

insurance. The products generally are subject to the same state and 

federal statutory provisions as other lending products, which under 

federal law include but are not limited to the following:

• Truth in Lending Act and its implementing Regulation Z, which 

requires certain disclosures about a card’s terms and cost.3 The 

Credit Card Accountability Responsibility and Disclosure Act of 2009 

amended the Truth in Lending Act to require certain disclosures about 

rates and fees on credit cards and prohibit certain practices (such as 

raising the rate on an existing balance).4

• Federal Trade Commission Act, which prohibits unfair or deceptive 

acts or practices.5

• Consumer Financial Protection Act of 2010, which prohibits unfair, 

deceptive, or abusive acts or practices by providers of consumer 

financial products or services and authorizes CFPB to take 

enforcement actions to prevent providers of consumer financial 

products or services from engaging in unfair, deceptive, or abusive 

acts or practices in connection with transactions with consumers 

involving consumer financial products or services.6

• Fair Credit Reporting Act, which generally prohibits creditors from 

obtaining and using medical information in connection with 

determining eligibility for credit.7 However, Regulation FF allows 

creditors to use medical information “[t]o determine, at the consumer’s 

request whether the consumer qualifies for a legally permissible 

 

3

Pub. L. No. 90-321, tit. I, 82 Stat. 146 (1968) (codified as amended at 15 U.S.C. §§ 

1601-1667f); 12 C.F.R. pt. 1026.

4

Pub. L. No. 111-24, § 101, 123 Stat. 1734, 1736 (codified at 15 U.S.C. § 1666i-1). 

5

Pub. L. No. 63-203, § 5, 38 Stat. 717, 719 (codified at 15 U.S.C. § 45).

6

Pub. L. No. 111-203, §§ 1031 and 1036, 124 Stat. 1376, 2005 and 2010 (codified at 12 

U.S.C. §§ 5531 and 5536).

7

Pub. L. No. 91-508, § 604, 84 Stat. 1114, 1129 (codified as amended at 15 U.S.C. § 

1681b(g)(2)). 
 

Page 4 GAO-14-570 Medical Credit Cards

special credit program or credit-related assistance program” that 

meets certain requirements.8

CFPB has primary supervisory authority for consumer financial protection 

laws at large banks and certain nondepository entities. Smaller banks 

(those with assets of $10 billion or less) are supervised by the federal 

banking regulators.9 CFPB has enforcement authority for violations of 

federal consumer financial laws, including violations of the Consumer 

Financial Protection Act of 2010 and the consumer financial protection 

laws, and rulemaking authority for these provisions. FTC has authority to 

enforce the Federal Trade Commission Act against most providers of 

financial services that are not banks, thrifts, and federal credit unions—

which may include some medical credit card companies—as well as 

health care providers in certain contexts.10 CFPB and FTC share 

enforcement authority for nonbanks in accordance with a memorandum of 

understanding. State attorneys general have enforcement authority under 

state and federal law, including the authority to enforce the Consumer 

Financial Protection Act of 2010 and CFPB rulemakings.11

 

8

12 C.F.R. § 232.4(a)(3). 

9

Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, §§ 

1024-1025, 124 Stat. 1376, 1987-93 (2010) (codified at 12 U.S.C. §§ 5514-5515). A large 

bank is defined as an insured depository institution with total assets of more than $10 

billion. Federal banking regulators include the Office of the Comptroller of the Currency, 

which has primary responsibility for supervising national banks, federal savings 

associations, and federal branches of foreign banks; the Board of Governors of the 

Federal Reserve System, which supervises state member banks and bank holding and 

savings and loan holding companies; and the Federal Deposit Insurance Corporation, 

which has primary responsibility for supervising state nonmember banks with assets of 

$10 billion or less. 12 U.S.C. § 1813(q).

1015 U.S.C. § 45; 12 U.S.C. § 5514(c)(3)(A). In January 2012, FTC and CFPB entered 

into a memorandum of understanding that sets forth a framework for coordinating certain 

law enforcement, rulemaking, and other activities.

11Pub. L. No. 111-203, § 1042, 124 Stat. 1376, 2012 (2010) (codified at 12 U.S.C. § 

5552).
 

Page 5 GAO-14-570 Medical Credit Cards

One company, CareCredit LLC (CareCredit), issues the majority of 

medical credit cards, according to available information, although no 

comprehensive data source on the industry exists.12 A registration 

statement (Form S-1) filed with the Securities and Exchange Commission 

in March 2014 by an affiliate of CareCredit reported that CareCredit had 

4.4 million active cardholders and 177,000 health care and veterinary 

providers in its network and revenues of approximately $1.5 billion for 

calendar year 2013. Market participants with whom we spoke cited three 

other banks—Citibank, N.A. (Citibank), Wells Fargo Financial National 

Bank (Wells Fargo), and Comenity Capital Bank (Comenity)—as also 

among the largest issuers of medical credit cards.13 Representatives of 

these banks generally said that data on the number of cardholders and 

network providers were proprietary, but told us they believed that their 

share of the market was relatively low.

Companies participating in the medical credit card marketplace play 

different roles (see table 1). Card issuers generally are responsible for 

marketing, origination, and underwriting of accounts, and management 

and collection of payments. CareCredit, Citibank, and Wells Fargo issue 

medical credit cards under their own names, while Comenity works with 

third-party companies (sometimes called aggregators) or retail networks 

that offer and market the product under their own names. For example, 

Comenity has a partnership with Springstone Patient Financing, a 

nonbank financial institution, to offer a product co-branded under 

 

12GE Capital Retail Bank, which is a federally chartered savings association, and its 

affiliate CareCredit LLC, which is a California limited-liability company, issue a consumer 

credit card marketed primarily for health care services under the name CareCredit. Both of 

these entities are indirect subsidiaries of General Electric Capital Corporation. The bank 

reported in 2014 that CareCredit was a “leading provider of promotional financing to 

consumers for elective healthcare procedures or services,” and the New York State Office 

of the Attorney General stated in 2013 that the company was “the largest issuer of 

consumer health care financing in the nation.” 

13Two other large banks, Capital One and JPMorgan Chase & Co., previously offered 

medical credit cards but ceased issuing such cards in 2009 and 2012, respectively. 

One Company 

Appears to Issue the 

Majority of Medical

Credit Cards

Market Participants
 

Page 6 GAO-14-570 Medical Credit Cards

Springstone’s name. With the direct oversight of Comenity, Springstone 

makes the product available through a network of participating providers, 

while Comenity is responsible for the financing and servicing of the credit 

card accounts.14

Table 1: Participants in the Market for Medical Credit Cards and Related Products, as of May 2014 

Role Examples Description 

Card issuers • CareCredit

• Citibank

• Wells Fargo

• Comenity

Financial institutions that issue medical credit cards, 

financing the loan and managing the account.

Aggregators • Springstone

• American HealthCare Lending

Companies that offer co-branded cards or installment 

loans, often marketed through participating providers. 

Partner with issuer that finances and services the loans. 

Participating providers • Individual dental, veterinary, or 

chiropractic offices

Providers that offer their clients a card branded under the 

card issuer’s or aggregator’s name. 

Retail networks • Ideal Image

• American Laser Skincare

Networks or chains of participating providers that offer 

their clients an issuer’s card branded under the network’s

or chain’s company name. 

Source: GAO. | GAO-14-570

In addition to these and other established companies, our review 

identified at least 25 websites that marketed financing for health care 

procedures but did not always clearly identify the corporate entity or 

financial institution with which they were affiliated.15 In some cases, these 

websites appeared to serve largely a marketing function, collecting 

information that would be used to direct consumers elsewhere. Apart from 

participants in the medical credit card market, some companies play other 

roles related to financing procedures not covered by health insurance. For 

example, some firms assist medical offices in arranging and managing 

their own payment plans, or they purchase accounts receivable from such 

offices and assume collections responsibilities.

 

14Comenity Capital Bank’s other products for financing health care and cosmetic services 

not covered by insurance are branded under Alphaeon, DentalFirst Financing Credit, 

Extendcredit.com, HealthiPlan® Medical Credit, HeathiPlan® Credit, Heartland, Ideal 

Image® VIP Credit Card, and Lifestyle Lift, among others.

15We contacted some of these companies through the customer service telephone 

number or e-mail address to obtain information about the corporate entity or financial 

institution with which they were affiliated, but were generally unsuccessful in eliciting 

responses to our inquiries.
 

Page 7 GAO-14-570 Medical Credit Cards

Card companies contract with participating providers to offer financing 

products to consumers. Card companies enroll providers into their card 

networks by marketing to them through trade shows, direct marketing 

sales calls, trade journal advertisements, direct mail, and e-mail. In some 

cases, card companies paid trade organizations to endorse specific 

products and promote them to their members. For example, CareCredit 

reported that as of December 2013, it had relationships with 107 

professional and other associations—such as the American Dental 

Association and American Animal Hospital Association—to endorse and 

promote CareCredit products to their members.16 The compensation for 

63 of the associations was linked to enrollment of association members in 

the company’s card program and the volume of product transactions by 

association members.

Dental care appears to be the procedure mostly commonly financed with 

medical credit cards. Among the companies we reviewed in depth, one 

reported that dental practices composed approximately 64 percent of its 

medical credit card business, veterinary 14 percent, cosmetic and 

dermatology 10 percent, vision 6 percent, audiology 3 percent, and other 

services such as weight loss treatments and procedures 4 percent. 

Representatives of another company, which entered the medical credit 

card market in 2003, told us that as of November 2013, dental and 

orthodontia made up about 85 percent of its medical credit card business, 

with the remaining 15 percent financing hair restoration, vision care, and 

audiology and veterinary services. Representatives from a third company, 

which entered the market in 2008, said that its largest market was for 

dental and audiology services, although its card also financed veterinary 

and vision services. Finally, representatives of the fourth company, which 

entered the medical credit card market in 2006, said it typically financed 

audiology, dental, hair removal, hair restoration, and skin care.

Participating providers compensate card companies for their clients’ use 

of the cards through a transaction or administrative fee. When a 

consumer’s financing is approved, the card company typically pays the 

 

16For example, CareCredit has an exclusive endorsement arrangement with the American 

Dental Association’s ADA Business Enterprises Inc., meaning the dental association could 

establish a partnership with only one credit card company. The dental association 

receives royalty fees in exchange for endorsing CareCredit to its members and providing 

access to the association’s name, logo, and membership list, and opportunities to market 

the product through direct mail, e-mail, and its member website. 

Relationship between 

Card Companies and 

Participating Providers
 

Page 8 GAO-14-570 Medical Credit Cards

provider the full amount financed—minus the fee—within 24 to 72 hours 

after service is provided. Card companies generally told us that the exact 

amount of the fee was proprietary information and generally declined to 

provide it to us. They said it can vary based on such factors as the 

provider’s overall volume of business and the specific financing options 

(such as payment plan and term length) that the provider makes available 

to patients or clients. In exchange for this fee, the card company rather 

than the provider is responsible for billing and collection and generally

assumes the risk of nonpayment by the borrower.

Card companies typically provide participating providers with the 

informational marketing materials, applications, and disclosures needed 

to enroll consumers. Card companies also often train providers and staff 

on the products and enrollment process through webinars and telephone 

tutorials, and in-person. Some card companies told us that they also offer 

participating providers dedicated customer support.

In December 2013, CFPB announced a consent order with GE Capital 

Retail Bank and its affiliate CareCredit.17 CFPB said it initiated an 

investigation of the company after receiving hundreds of complaints from 

consumers. The consent order alleged

• deceptive card enrollment processes, such as unclear communication 

about the terms of the deferred interest product;

• inadequate disclosures, whereby consumers did not always receive 

copies of the actual card agreement and did not understand the terms 

of the deferred interest product (discussed in the next section); and

• poorly trained staff at some health care provider offices, some of 

whom admitted they were confused by the product.

As part of the settlement, GE Capital Retail Bank and CareCredit must 

refund up to $34.1 million to what CFPB described as potentially more 

than 1 million CareCredit consumers.18 The company also agreed to 

 

17In the Matter of GE Capital Retail Bank, CareCredit LLC, Consent Order, File No. 2013-

CFPB-0009 (Dec. 10, 2013). 

18Under the consent order, GE Capital Retail Bank and CareCredit were required to set 

aside $27.7 million in a fund to be distributed to eligible consumers, with any remaining 

funds available to CFPB for equitable relief, and another $6.4 million to be used for the 

same purpose, with any remaining funds to be returned to the company.

Settlements with GE 

Capital Retail Bank and 

CareCredit
 

Page 9 GAO-14-570 Medical Credit Cards

make several changes in its practices, including enhancements to 

consumer disclosures provided during the application process and on 

billing statements immediately prior to the expiration of the promotional 

period, enhanced training to providers on making the terms of the credit 

arrangement transparent to patients, and enhanced warnings to 

consumers about the expiration of the promotional period. 

(Representatives of CareCredit told us that it already had in place some 

of these practices.) In addition, for dental or audiology transactions over 

$1,000, consumers must apply directly to CareCredit, rather than through 

the health care provider, for credit approval if they use the card for such a 

transaction within 3 days of the application.

In June 2013, GE Capital Retail Bank and CareCredit entered into a 

settlement agreement with the New York Attorney General, who had 

alleged deceptive enrollment practices and inadequate disclosure of 

product terms and conditions.19 This settlement required CareCredit to 

provide a 3-day “cooling-off” period, which prohibits certain charges of 

$1,000 or more on a CareCredit card within 3 days of an in-office 

application and provides New York consumers an opportunity to consider 

the card’s terms and the treatment plan. The settlement also limited what 

the health care provider can charge in advance and required clearer 

disclosure of the interest rates associated with deferred-interest products 

(discussed below). It also required CareCredit to call consumers within 72 

hours of the submission of a CareCredit application with a same-day 

charge to confirm the account opening with the consumers and to inform 

them of certain account terms, a practice that CareCredit has said it 

adopted nationally. In addition, the settlement required CareCredit to pay 

for and establish an appeals fund that resulted in cardholder refunds or 

adjustments of approximately $175,000.

 

19In the Matter of GE Capital Retail Bank and CareCredit, LLC. Assurance of 

Discontinuance, Assurance No. 12-103 (June 3, 2013). 
 

Page 10 GAO-14-570 Medical Credit Cards

The medical credit cards we reviewed in depth resembled conventional 

credit cards (offered a revolving line of credit with an established credit 

limit) and offered some form of promotional financing (special terms and 

conditions valid for a specified period).20 Most common was a deferred 

interest option, which 85 percent of CareCredit cardholders had chosen, 

according to the settlement agreement with CFPB. Deferred interest 

plans start accruing interest from the initial purchase date based on the 

stated annual percentage rate (APR). If the entire promotional balance is 

paid off during the specified promotional period (generally 6, 12, 18, or 24 

months, depending on the plan), the accrued interest is waived. But if the 

balance is not paid in full within the specified promotional period, the 

accrued interest is assessed to the account. As seen in table 2, the APR 

for consumers who did not pay off the purchase amount before the 

promotional period expired varied depending on the product, but our 

analysis found that most cardholders had deferred interest products with 

an APR of 26.99 percent or more. One company’s APR was 26.99 

percent, a second ranged from 26.99 to 28.99 percent, and a third ranged

from 14.99 to 26.99 percent. A fourth company offered a variable APR of 

9.99 percent that became effective October 22, 2013; before that it had 

been 27.99 percent. The companies declined to provide the proportion of 

consumers who did not pay off the full balance during the promotional 

period, stating that this information was proprietary.21 Although less 

common, major card companies we reviewed also offered a promotional 

monthly fixed-payment option, which charged a set interest rate (an APR 

from 0 to 17.99 percent) during a specified period (from 12 to 60 months).

 

20We gathered and analyzed the terms and conditions of medical credit card products of 

the four companies appearing to be among the largest card issuers. For information on 

additional data sources and analyses, see appendix I.

21While data specific to medical credit cards were not available, 80.2 percent of 

consumers with deferred interest products of any kind paid off their balance by the end of 

the promotional period in 2010, according to CFPB. CFPB, CARD Act Report: A Review of 

the Impact of the CARD Act on the Consumer Credit Card Market (Washington D.C.: Oct. 

1, 2013). 

Medical Credit Cards 

Commonly Offer 

Revolving Credit with 

Deferred Interest
 

Page 11 GAO-14-570 Medical Credit Cards

Table 2: Characteristics of Selected Medical Credit Cards, as of May 2014

Type of credit

Promotional 

financing options Annual percentage rate Term lengths 

Card company #1 Revolving line of 

credit

Deferred interest 26.99% fixed, but no interest charged if paid in full 

before promotional period expires

6, 12, 18, or 24 

months

Fixed monthly 

payment

14.90% fixed 24, 36, 48, or 60 

months

Card company #2 Revolving line of 

credit

Deferred interest From 26.99 to 28.99% fixed, but no interest 

charged if paid in full before promotional period 

expires

6, 12, 18, or 24 

months

Fixed monthly 

payment

15.90% fixed 24, 36, or 48 

months

Card company #3 Revolving line of 

credit

Deferred interest 9.99% variable, but no interest charged if paid in 

full before promotional period expiresa 6, 12, or 18 months

Fixed monthly 

payment

9.99% variable 18, 24, 36, 48, 

or 60 months

Interest-free, fixed 

monthly payment

0% 24 or 36 months

Card company #4 Revolving line of 

credit

Deferred interest From 14.99 to 26.99% variable, depending on 

product, but no interest charged if paid in full before 

promotion expires

6-24 months, 

depending on 

program

Fixed monthly 

payment

From 14.99% to 17.99% variable 12-60 months, 

depending on 

program 

Source: Card companies. | GAO-14-570

a

Prior to October 22, 2013, the APR for this product was 27.99 percent.

The number of cardholders who do not participate in promotional 

financing appears to be small; for example, CareCredit told us that the 

vast majority of the credit extended through its medical credit card was 

promotional financing. The standard APR without promotional financing 

ranged from 9.99 to 28.99 percent. Representatives of the medical credit 

card companies with whom we spoke said their customers typically were 

prime borrowers—that is, with credit scores that put them at low risk of 

default—and that the interest rates and other terms of the loan did not 

vary based on the cardholder’s credit profile.

As noted earlier, in addition to the companies listed above, we identified 

25 websites that marketed products—either revolving lines of credit or 

installment loans—designed to finance services not covered by health 

insurance. These websites did not always provide comprehensive 

information about the terms and conditions of the products, which 

generally appeared to be marketed by smaller companies, and we did not 
 

Page 12 GAO-14-570 Medical Credit Cards

verify the product information. However, some of these websites 

appeared to market financing terms, such as deferred interest, similar to 

those of the banks listed above. In addition, two companies marketed 

products that charged interest, but refunded that interest in the form of a 

rebate check if the loan was paid in full within 12 months. Some of these 

websites marketed financing for persons with a wide range of credit 

histories, including those with marginal or poor credit.

We provided a draft of this report to CFPB and FTC. CFPB provided 

technical comments that we incorporated as appropriate. We also 

provided selected relevant portions of the draft for technical review to 

CareCredit, LLC; Citibank, N.A.; Comenity Capital Bank; Springstone 

Patient Financing; and Wells Fargo Financial National Bank, and 

incorporated their technical comments as appropriate.

We are sending copies of this report to the Director of CFPB and the 

Chairwoman of FTC. In addition, the report will be available at no charge 

on GAO’s website at http://www.gao.gov. 

Please contact me at (202) 512-8678 or brownbarnesc@gao.gov if you or 

your staff have any questions about this report. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on 

the last page of this report. Key contributors to this report are listed in 

appendix II.

Cindy Brown Barnes

Acting Director, Financial Markets

 and Community Investment

Agency Comments 

and Our Evaluation
 

Page 13 GAO-14-570 Medical Credit Cards

List of Requesters

The Honorable Edward J. Markey

United States Senate

The Honorable Maxine Waters

Ranking Member

Committee on Financial Services

House of Representatives

The Honorable Elijah E. Cummings

Ranking Member

Committee on Oversight and Government Reform

House of Representatives
Appendix I: Objectives, Scope, and 

Methodology

Page 14 GAO-14-570 Medical Credit Cards

This report examines the (1) participants and (2) products in the 

marketplace for medical credit cards. For the purposes of this report, we 

used “medical credit cards” to refer collectively to financial products—

including revolving credit lines and installment loans—that are designed 

specifically to finance health care services not covered by health 

insurance. This report provides an overview of this industry, but does not 

necessarily describe all its products and participants.

To address these objectives, we conducted a literature review of articles 

using the Proquest, PubMed, and ABI/Inform databases using search 

terms such as “medical credit card,” “health care credit card,” “healthcare 

financing,” and “medical financing” for the purpose of obtaining 

background and context surrounding the products. We also searched the 

Internet using these same search terms and also “medical procedure 

financing.” We reviewed publications from, or interviewed representatives 

of, organizations that study the credit card industry, such as Argus 

Information and Advisory Services, The Nilson Report, and 

CreditCards.com.

We interviewed representatives of companies that serve as lenders or 

marketers of medical credit cards, including AA Medical Finance, 

Advance Care, American HealthCare Lending, Citibank N.A., Comenity 

Capital Bank, Fundmydr.com, GE Capital Retail Bank’s CareCredit LLC, 

HELPcard, JPMorgan Chase & Co., MedicalFinancing.com, 

MyMedicalFunding, Springstone Patient Financing, United Medical Credit, 

and Wells Fargo Financial National Bank, as well as CarePayment, which 

provides billing and patient financing services. These companies were 

selected either because they were identified by industry and government 

representatives as key players in this marketplace or because they 

represented a variety of different sizes, roles, and products. We also 

corresponded with the Financial Services Roundtable, a trade 

organization representing financial services companies. We also 

interviewed representatives of two federal agencies, the Bureau of 

Consumer Financial Protection (known as CFPB) and the Federal Trade 

Commission. We conducted two group interviews, coordinated by the 

National Association of Attorneys General, that together included staff 

from the office of the attorney general of nine states that chose to 

participate (Indiana, Louisiana, Maryland, Massachusetts, Nebraska, 

Nevada, New York, Ohio, and Tennessee), as well as a separate 

interview with the Minnesota Office of the Attorney General, which had 

been examining the medical credit card industry. We also interviewed or 

received written responses from organizations representing health care 

providers (American Dental Association and American Society of Plastic 

Appendix I: Objectives, Scope, and 

Methodology
Appendix I: Objectives, Scope, and 

Methodology

Page 15 GAO-14-570 Medical Credit Cards

Surgeons) and representatives of consumer interests (Consumers Union, 

National Consumer Law Center, and Community Health Advisors).

Our review of reports and data from organizations that study the credit 

card industry broadly, and interviews with industry representatives, 

indicated that no comprehensive source of information existed on the 

medical credit card industry and the market share of its participants. 

However, based on the testimonial and documentary information we 

received from the sources above, we identified four companies that 

appeared to be among the largest market participants—CareCredit LLC, 

Citibank, N.A., Comenity Capital Bank, and Wells Fargo Financial 

National Bank—which we selected for greater examination.

In addition to our interviews with company representatives, we gathered 

and analyzed the terms and conditions of these companies’ medical 

credit card products, application forms, and informational and marketing 

materials when publicly available or provided by the company. One card 

company also provided us with a generic copy of its standard contract 

with participating providers. We also reviewed, where applicable and 

available, the companies’ public filings with the Securities and Exchange 

Commission. We found that only the filing for an affiliate of CareCredit 

reported information specific to medical credit cards. To assess the 

reliability of that public filing, we reviewed the data for completeness and 

consistency and found that they were reliable for the purposes of 

describing characteristics of the CareCredit product.

Apart from the four companies we examined in depth, we collected and 

reviewed publicly available product information from the websites of 25 

other companies that provide medical credit cards and related products. 

In some instances, we contacted the companies to confirm or clarify 

certain aspects of the products. We generally did not independently verify 

this information, but we did use it for context and to provide a broader 

picture of available products and key features.

We reviewed applicable federal laws and regulations related to medical 

credit cards and to lending products more generally, including Regulation 

Z1 (which implements the Truth in Lending Act),2 the Consumer Financial 

 

1

12 C.F.R. pt. 1026. 

2

Pub. L. No. 90-321, tit. I, 82 Stat. 146 (1968) (codified as amended at 15 U.S.C. §§ 1601-

1667f). 
Appendix I: Objectives, Scope, and 

Methodology

Page 16 GAO-14-570 Medical Credit Cards

Protection Act of 2010,3 the Federal Trade Commission Act,4 the Credit 

Card Accountability Responsibility and Disclosure Act of 2009,5 and the 

Fair Credit Reporting Act.6 We also reviewed the settlement agreements 

and related materials resulting from two enforcement actions against 

CareCredit, one by CFPB and one by the New York State Office of the 

Attorney General.

We conducted this performance audit from July 2013 to June 2014 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

 

3

Pub. L. No. 111-203, tit. X, 124 Stat. 1376, 1955 (2010).

4

Pub. L. No. 63-203, 38 Stat. 717 (codified at 15 U.S.C. §§ 41-58). 

5

Pub. L. No. 111-24, 123 Stat.1734 (codified in scattered sections of 15 and 16 U.S.C.). 

6

Pub. L. No. 91-508, tit. VI, 84 Stat. 1114, 1127 (1970) (codified at 15 U.S.C. §§ 1681-

1681x).
Appendix II: GAO Contact and Staff 

Acknowledgments

Page 17 GAO-14-570 Medical Credit Cards

Cindy Brown Barnes, (202) 512-8678 or brownbarnesc@gao.gov

In addition to the contact name above, Jason Bromberg (Assistant 

Director), Rhonda Rose (Analyst-in-Charge), Bethany Benitez, Pamela 

Davidson, Josephine Perez, Barbara Roesmann, and Jena Sinkfield

made key contributions to this report. 

Appendix II: GAO Contact and Staff 

Acknowledgments

GAO Contact

Acknowledgments

(250743)
The Government Accountability Office, the audit, evaluation, and 

investigative arm of Congress, exists to support Congress in meeting its 

constitutional responsibilities and to help improve the performance and 

accountability of the federal government for the American people. GAO 

examines the use of public funds; evaluates federal programs and 

policies; and provides analyses, recommendations, and other assistance 

to help Congress make informed oversight, policy, and funding decisions. 

GAO’s commitment to good government is reflected in its core values of 

accountability, integrity, and reliability.

The fastest and easiest way to obtain copies of GAO documents at no 

cost is through GAO’s website (http://www.gao.gov). Each weekday 

afternoon, GAO posts on its website newly released reports, testimony, 

and correspondence. To have GAO e-mail you a list of newly posted 

products, go to http://www.gao.gov and select “E-mail Updates.”

The price of each GAO publication reflects GAO’s actual cost of 

production and distribution and depends on the number of pages in the 

publication and whether the publication is printed in color or black and 

white. Pricing and ordering information is posted on GAO’s website, 

http://www.gao.gov/ordering.htm. 

Place orders by calling (202) 512-6000, toll free (866) 801-7077, or 

TDD (202) 512-2537. 

Orders may be paid for using American Express, Discover Card, 

MasterCard, Visa, check, or money order. Call for additional information.

Connect with GAO on Facebook, Flickr, Twitter, and YouTube. 

Subscribe to our RSS Feeds or E-mail Updates. Listen to our Podcasts. 

Visit GAO on the web at www.gao.gov. 

Contact:

Website: http://www.gao.gov/fraudnet/fraudnet.htm

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470

Katherine Siggerud, Managing Director, siggerudk@gao.gov, (202) 512-

4400, U.S. Government Accountability Office, 441 G Street NW, Room 

7125, Washington, DC 20548

Chuck Young, Managing Director, youngc1@gao.gov, (202) 512-4800

U.S. Government Accountability Office, 441 G Street NW, Room 7149 

Washington, DC 20548

GAO’s Mission

Obtaining Copies of 

GAO Reports and 

Testimony

Order by Phone

Connect with GAO

To Report Fraud, 

Waste, and Abuse in 

Federal Programs

Congressional 

Relations

Public Affairs

Please Print on Recycled Paper.