The Consumer Financial Protection Bureau (CFPB) announced that GE Capital Retail Bank will be providing refunds that could affect up to 1 million cardholders. At issue is the confusion surrounding deferred interest financing plans which consumer advocates claimed trapped unaware borrowers into high interest credit arrangements.
CareCredit was a popular option for patients who needed a way to finance their medical and dental care. Many doctors and dentists promoted the plans as a way for patients to pay their bill in full and benefit from interest-free financing.
What many borrowers were not aware of is that the interest was only deferred. If they fail to repay the credit balance in full prior to the end of promotional period of 6 to 24 months on average, then they would be charged retroactive interest at a 26.99% APR. This could lead to interest charges in excess of $1000 being added to a customer’s bill overnight.
The CFPB determined that there were deceptive aspects of the enrollment process. Many borrowers were not made fully aware of the retroactive nature of the finance charges if they did not repaid the credit account balances prior to the end of the promotional period.
An investigation found that borrowers were frequently relying on verbal explanations provided by receptionists or other office staff and did not receive hardcopies of their credit contracts. This increased the amount of abuse since many borrowers were not told of the temporary nature of the promotional rate.
CareCredit cardholders who are affected will be notified directly by GE Capital Retail Bank. The bank is notifying current and former cardholders and will be providing refunds to those customers. In some cases a refund may be applied to your current CareCredit account balance. Former customers may receive a check by mail.
CareCredit remains a reasonable option for patients who need to be able to pay off a medical debt as a condition for receiving continuous care. Many physicians will require that former debts are repay before they will be able to continue offering medical or dental care.
If you are no longer receiving care from a certain physician, then you are usually better off to repay that medical debt through a series of monthly payments that may carry no interest at all. If the physician does charge interest in you should calculate whether any savings will be expected by financing the debt. For larger debts medical bill assistance may be able to provide a reduction in the overall bill.
Long is a graduate of the University of North Carolina at Chapel Hill with a B.A. in Industrial Relations. He subsequently received his Certificate in Nonprofit Management from Duke University. His Certificate in Financial Planning was issued by Florida State University.
Long has achieved the Accredited Credit Counselor and Accredited Financial Counselor certifications through the Association for Financial Counseling, Planning and Education. Long originally achieved the Certified Credit Counselor designation through the National Institute for Financial Education.
In addition to years of nonprofit leadership, Long has been an innovator in the field of volunteer tax return preparation programs. He assists volunteer associations and nonprofit organizations who seek to integrate credit counseling and asset-building programs with free personal income tax preparation. His approach to using free credit reports as both an incentive and a screening tool for placement into asset-building programs has been shared with members of the National Community Tax Coalition, the EITC-Carolinas Initiative of MDC, Inc. and nonprofit groups across the Carolinas.
Long assists members of our armed forces in the Carolinas, Iowa, Rhode Island, Georgia and Germany with financial readiness. Please support our Soldiers, Marines, Airmen and Sailors!
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