|
|
|
The Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009 is expected to have far reaching repercussions when it comes to availability of credit for those who need it most. No one can dispute the good intentions of the legislation to protect consumers and prohibit credit card companies from the unscrupulous practices that led to this legislation. However, hospital financial leaders should be prepared for the unintended consequences of this legislation as it is expected to impact the people who have relied on credit cards to cover emergencies and specifically, medical emergencies. For a good summary of the legislation and how it benefits consumers, go to: http://www.govtrack.us/congress/bill.xpd?bill=h111-627&tab=summary Hospitals can expect the following: Fewer patients will be willing to use credit cards to pay for their medical expenses. Because interest rates are expected to increase and with that comes a higher required minimum monthly payment. With this law, there is no cap on interest rates except under certain conditions, such as active duty deployment in the military. Retroactive interest rate hikes on existing balances are banned with a few exceptions. Exceptions include situations where the card user is more than 60 days late making a monthly payment, a scenario that could easily apply to people who are in financial crisis due to a medical emergency. However, this doesn't mean a credit card company cannot raise rates on future purchases. The new law requires credit card companies give 45 days notice before making changes to interest rates, which is fine for people who can shop around for a better deal. Patients who do not have the option to switch to a card with a more competitive rate will be looking for alternatives to pay their medical bills, if other choices are offered. Fewer people will qualify for cards in the future. It is expected that more credit card companies will issue cards with interest rates tied to an index. This will make the rates variable, which is another exception allowed under the legislation. Because of the uncertainty, it is expected that credit card companies will be unwilling to offer cards to people with less than stellar credit scores. Fewer people will qualify for cards, resulting in fewer people having access to credit cards to pay for medical emergencies. The new legislation will ban the issuance of credit cards to people under 21 years of age unless they have a co-signer or they can prove they have a way of repaying the debt i.e., a job. Since it will be more difficult for young people to get credit cards, the credit card companies will be cut off from their best source of add-on fees, such as over-the-limit fees and late fees. With the new legislation, consumers over the age of 21 will have to explicitly opt in for over-the-limit fees. In short, the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009 will protect consumers in important ways, but reduce access to credit cards for people who may need them in an medical emergency. Hospitals need to be prepared to offer patients other methods of paying their bills including extended low-interest payment arrangements, such as The Midland Payment Plan. For more information about The Midland Payment Plan, click here. |