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January 01, 2020

California curbs deferred-interest credit for veterinary care

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Credit cardsLater this year in California, providers of medical and veterinary care and their employees will be prohibited from arranging or establishing open-end credit or loans that include deferred-interest provisions. Patients and animal owners, however, will still be able to apply directly for deferred-interest financing from companies such as CareCredit.

The ban, which takes effect in July, is the result of legislation signed by Gov. Gavin Newsom in October 2019 meant to protect consumers from unwittingly signing up for credit products that do not require interest payments during an introductory period but that still accrue interest at high rates during that introductory period.

Few consumers understand that if they fail to pay the entire balance during the introductory period or if they make a late payment, they end up with an interest charge that can be larger than the remaining balance, according to state Sen. Holly J. Mitchell, who co-authored the law, and Jen Flory, a health policy advocate with Western Center on Law & Poverty.

“While third-party financing may have a place when patients need services they can’t immediately afford, products with deferred interest clauses have no place in medical practice,” Mitchell and Flory wrote in a commentary for CalMatters, a nonprofit journalism venture covering the California state capital.

They wrote, “Providers shouldn’t market high-interest, third-party credit in high-pressure situations when patients can’t research options.”

In a statement, CareCredit said the company will continue helping Californians get the care they want for themselves, their families, and their pets.

“Thanks to the outpouring from consumers and veterinarians, together we were successful in modifying SB 639 to protect consumers’ continued use of CareCredit for pet care in California,” according to the statement.

“Under the new law, consumers will apply for CareCredit financing directly through their smartphones, computers, or laptops or via tablets in a veterinarian’s practice,” the statement explained. “Californians will still be able to access the full benefits of CareCredit, including deferred interest financing, when receiving services through a participating veterinarian.”