Senators Call on Consumer Financial Protection Bureau (CFPB) to Address Financial Risks of Medical Credit Cards and Protect Consumers 

Text of Letter (PDF)

Companies’ Responses to Senators’ 2022 Questions (PDF)

July 3, 2023 - Washington, D.C. – Last Friday, United States Senators Elizabeth Warren (D-Mass.), a member of the Senate Banking, Housing, and Urban Affairs Committee, Edward J Markey (D-Mass.), a member of the Senate Health, Education, Labor, and Pensions Committee and Bernie Sanders (I-Vt.), Chair of the Health, Education, Labor, and Pensions Committee, released the findings from their investigations into medical credit cards, which found that they can pose significant threats to patients’ finances. The senators sent a letter to the Director of the Consumer Financial Protection Bureau (CFPB) Rohit Chopra, urging the CFPB to initiate rulemaking to eliminate deferred interest and address other consumers risks from medical credit cards. 

“My investigation found that giant banks are saddling patients with medical credit card debt at their most vulnerable moments,” said Senator Warren. “The CFPB must take immediate action to protect patients from these shady practices, starting with putting an end to deferred interest for medical credit cards.”

Millions of consumers are often forced into circumstances where medical credit cards seem like the best and only options to pay for health care services. In December 2022, the senators opened an investigation into medical credit cards, requesting information from Synchrony Financial (Synchrony) and Wells Fargo, two of the largest banks offering these cards. Their examination of Synchrony’s CareCredit (CareCredit) and Wells Fargo’s Health Advantage (WFHA) products uncovered new information about the prevalence of medical credit card use and the risk that misinformation  about these cards poses to consumers: 

• Many medical credit card users are unable to pay off their balance during the deferred interest promotional periods. 

Synchrony reported that the majority of CareCredit transactions are subject to deferred interest or reduced rate promotions, but “approximately 23% of …transactions were not repaid within the promotional period, and therefore, assessed interest.” Similarly, Wells Fargo reported that nearly 20 percent of WFHA cardholders did not pay off their balance under the deferred interest promotion period.

• Medical credit cards have higher delinquency rates than other financial products.

Synchrony and Wells Fargo reported that delinquency rates were higher for borrowers using medical credit cards than for those using traditional credit cards. Synchrony’s data showed that 3.28 percent of outstanding balances were delinquent as of September 2022, compared to 2.09 percent for all credit card holders. Similarly, delinquency rates for WHFA users were one percentage point higher than overall delinquency rates for Wells Fargo customers.

• Medical credit card users may be faced with improper charges for care or services that they either did not receive or should have received for free or at a reduced price.

Synchrony stated that its CareCredit “program is designed to operate alongside (and not part of or in lieu of) (a medical) system's existing assistance programs,” and clarified that Synchrony “do(es) not have a role in determining which patients a hospital bills or how much they are billed for particular components of their care.” Consumer advocates found that prior to opening a medical credit card, many patients were not screened for the hospital’s financial assistance program or were charged for care that should have been covered by insurance.

Given these findings, the senators are calling on the CFPB to take action to curb the significant harms to patients’ finances posed by medical credit cards. They are asking the agency to initiate a rulemaking to eliminate deferred interest on medical credit cards – a step that over 60 organizations called on the CFPB to take earlier this year. They are also asking the CFPB to explore ways to require companies offering medical credit cards to verify that all financial assistance and insurance options have been exhausted before approving an application to open a medical credit card. 

Senator Warren has led the fight to protect consumers and servicemembers from medical debt:

• In April 2023, at a hearing of the Senate Banking, Housing, and Urban Affairs, Senator Warren questioned the CEOs of Equifax, TransUnion, and Experian on the unreliability of medical debt data and its consequences for Americans’ creditworthiness. Senator Warren also pressed  the agencies on their willingness to exclude medical debt data from future consumers’ reports, citing research showing that medical collections are less predictive of consumers’ future delinquency rates than nonmedical debt collections. 
• In March 2023, chairing her first hearing of the Senate Armed Services Subcommittee on Personnel, Senator Warren highlighted the importance of putting pressure on the Department of Defense (DoD) to exercise its authority to waive civilian medical debt.
• In March 2023, Senator Warren sent a letter to DoD Secretary Lloyd Austin, requesting information from DoD about its efforts to implement recommendations from the CFPB’s Office of Servicemember Affairs’ Annual Report to address servicemember medical debt.
• In March 2023, Senator Warren and Representative Joaquin Castro (D-Texas) sent a letter to DoD Assistant Secretary for Health Affairs Dr. Lester Martinez-Lopez and Director of the Defense Health Agency Lieutenant General Telita Crosland, urging the agency to waive civilian patients’ medical debts incurred at military treatment facilities, using statutory authority established by the lawmakers’ provision in the Fiscal Year (FY)  2021 National Defense Authorization Act. 
• In December 2022, Senators Warren and Markey led their colleagues in sending letters to Synchrony Bank and Wells Fargo, raising concerns about their medical credit cards and the potential financial harm they may inflict on patients.
• In December 2022, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren asked Director Chopra about the CFPB’s achievements over the last year to hold big banks and giant corporations accountable and put money back in working families’ pockets. The Senator asked Director Chopra about the Bureau’s work to eliminate junk fees, take on deceptive student loan servicers and shoddy tenant screening services, and eliminate medical collection debt from consumers’ credit reports.
• In August 2022, Senator Warren and Representative Castro sent a letter to Secretary Austin, raising concerns that DoD may be misleading or misinforming civilians about debt they incur when they receive emergency medical care at military health care facilities, and calling for improved billing practices to protect patients.
• In March 2022, Senator Warren joined Senator Sherrod Brown (D-Ohio) in sending a letter to Director Chopra, highlighting the growing medical debt burden faced by consumers. They urged the CFPB to use its authority to address the growing medical debt burden faced by consumers and establish an ombudsman position for consumer medical debt.
• The FY 2021 National Defense Authorization Act included Senator Warren's provision, based on the Financial Relief for Civilians Treated at Military Hospitals Act, to give DoD the authority to waive medical debt when the civilian is unable to pay the costs of the care provided and the care enhances the knowledge, skills, and abilities of military healthcare providers.
• In January 2020, Senator Warren sent a letter to DoD and the Treasury Department, requesting information about the collection of military hospital debt from low-income, civilian patients.
  Source: Senator Elizabeth Warren