How Does CareCredit Work? – Forbes Advisor

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The CareCredit® credit card* is a healthcare credit card designed to provide special financing options for health expenses. A cardholder can use a CareCredit card to pay for medical services like emergency care, pharmacy costs, surgery, labs, primary care, pet care and more. CareCredit is often used for out-of-pocket costs that health insurance doesn’t cover, including copayments or deductibles—enabling consumers to defer payments on pricey uninsured health costs.

CareCredit is issued by Synchrony Bank. Its website states that CareCredit is accepted by over 250,000 enrolled providers in the US. The special financing options vary and should be discussed with a care provider before selecting a promotion. Prospective cardholders can see if they prequalify for a CareCredit card by filling out a basic application on the company website.

How to Apply for CareCredit

There are no membership requirements to apply for CareCredit. US residents 18 and over may apply online. Those applying by phone must be 21 or over. The issuer offers a simple application that lets applicants know whether they prequalify for a credit card, all without impacting credit scores. Like most credit card applications, this one requires basic information like name, date of birth, social security number and net income.

Prequalification doesn’t guarantee approval. If an applicant prequalifies, he or she can fill out a longer application requiring a hard credit check. New cardholders can select the promotion offered after being approved for the credit card.

CareCredit’s Special Financing Options

CareCredit’s main draws are the special financing options offered to cardholders. Short-term promotional periods offer zero interest while long-term promotions offer lower APRs than the standard 26.99% —an APR higher than that of even the top-rated rewards-earning credit cards. The entire balance must be paid off during the promotional period to avoid accruing higher interest. Cardholders are not required to select a promotional offer when applying (it can be selected after approval and before paying for a large medical expense). Not all providers offer the same promotional options, so it’s important to check with a healthcare provider before applying.

Short-Term Financing Options

CareCredit offers 6, 12, 18 or 24-month financing with no interest on purchases of $200 or more. Assuming the cardholder makes one large purchase for a medical expense, the balance should be paid off by the end of the promotional period to avoid interest. If the balance is not paid in full, you will be responsible for the deferred interest.

Cardholders should check with their providers and read all of the card’s terms before selecting a promotional period. Beware of low promotional APRs that, upon expiration, require a cardholder to pay high interest that has been deferred from the purchase date—not the end of the promotional period like with many standard 0% introductory APR credit cards.

Long-Term Financing Options

CareCredit’s long-term options offer lower interest rates than the high, standard 26.99% purchase APR. There are 24, 36, 48, or 60-month promotional periods with varying reduced APRs and fixed monthly payments.

Purchases of $1,000 or more are eligible for:

  • 24 months—14.90% APR
  • 36 months—15.90% APR
  • 48 months—16.90% APR

Purchases of $2,500 or more eligible for:

CareCredit’s long-term plans have fixed monthly payments allowing the cardholder to pay off the entire balance by the end of the period. Beware that these APRs are considered high and that many standard credit cards offer lower APRs. While we understand not everyone has the privilege of choice when it comes to financing options, we highly recommend exploring every available option—especially non-credit-card lines of credit—before signing up to risk paying high APRs like these. If you aren’t yet familiar with APR or need a refresher, check out our guide to APR and our advice about what a good APR is.

How to Avoid Paying Higher Interest

CareCredit can seem like a convenient option for medical expenses, but be aware that CareCredit’s minimum monthly payments calculated for short-term promotional periods may not result in paying off the entire balance by the end of the period. Instead, if you choose to apply for and use CareCredit, you should calculate their own equal minimum monthly payment by dividing the total balance by the number of months allotted for the promotional period. Only paying the minimum payments as indicated by CareCredit will mean a remaining balance by the end of the period that may eventually mean paying hefty interest.

For example, if a cardholder has a single large balance of $1,800 over a 6-month zero-interest period, the cardholder should make equal monthly payments of at least $300 in order to pay off the balance and avoid paying interest.

Another option for short-term financing periods is to make CareCredit’s minimum monthly payments, then pay off the remaining balance in the last month. This can be a risky game—will you have the funds to pay off the balance before it begins charging you for the deferred interest?

For long-term promotional periods, the equal minimum monthly payment listed on the cardholder’s monthly statement should be enough to pay off the balance by the end of the period (as long as the cardholder makes payments on time every month). One option to pay less interest is to make larger monthly payments when possible.

Note that any additional purchases made during a promotional period may alter how each month’s payment is applied to the balance.

Bottom Line

While CareCredit may be a financing option for people facing a large medical expense, potential cardholders should be aware of high standard APRs following promotional low or deferred interest periods and be prepared to do their own math to figure out an equal minimum monthly payment that will allow them to pay off the entire balance and avoid interest.

A standard 26.99% APR starting from the purchase date will accrue if the cardholder doesn’t pay off a balance by the end of the promotional period. Always check with a health provider to make sure a desired promotional period is available for the medical purchase. Read all the terms in the card agreement before applying and making a large purchase. And be sure to pay off the entire balance in time.

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