The Citi Health Card -- a medical credit card from Citibank -- is one of the sneakiest credit products on the market today. The product includes "deferred interest" and a 30% interest rate. What this means is that after an introductory rate of 18 months, even after paying the minimum payment (or more) for the entire 18-mo period, the debtor incurs a finance charge for the 30% against the original balance.
I had an original debt of $4,000 that I had paid down to $2,881 over the 18 month introductory term of the Citi Health credit card. On the 19th month, after making payments every month, I was saddled with an additional $1954 debt due to the sneaky "deferred interest" clause.
Consumers are often signing up for this card when they have no other way to pay for out-of-pocket medical and dental costs. Worse still is that these products are exempt from federal truth-in-lending requirements, meaning that the medical professional doesn't even have to understand or explain the terms of the credit card to the consumer.
People trust their doctors and dentists and when they're told they need to buy a service (for example, corrective braces to prevent teeth from striking together which would ultimately cause teeth to fall out). When their medical professional tells them there's a debt product that can help them afford the procedure/product, they trust that their doctor wouldn't lead them into a trap.
A 30% interest rate is absurd for someone who pays their minimum payment on time and the whole idea of retroactive, deferred interest is sneaky at best. Citbank needs to stop tricking customers; they should:
- reduce the interest rate to a standard calculation (Prime + a rate based on user's credit score or debt-to-income ratio);
- adhere to the Truth in Lending Act (including use of Schumer box to make clear the interest rates being charged); and
- remove deferred interest features (interest can only be charged on the balance at end of promotional period, not original balance, and can only be charged on a go-forward basis, not retroactively)
Let's send a message to Citibank that consumers have enough to worry about without being tricked into these poisonous debt products.