I swear - the next time somebody tells me that in the Chinese language the word "Crisis" is composed from the characters for "Danger" and "Opportunity" so the current crisis is not so bad because there are some hidden business opportunities, I will take a baseball bat to their kneecaps.
However, it seems that some bright light bulbs (CF) in Visa and Mastercard headquarters have heard about this "Opportunity stuff" as well - and they found a new target population: People who can not pay for health care.
Here is the thing, Yesterday in CNN money website appeared the following article:"Can't pay your doctor? Charge it! "
And it started with the following sentence:
As more cash-strapped Americans resort to paying medical bills on credit cards, experts say it's a risky trend for consumers but a huge untapped market for lenders.
" Huge....untapped....market....for....lenders"
Regardless, Kalorama's Carlson says that health care related credit is an obvious target market for financial services providers. With retail shopping drying up, lenders need new ways to boost consumer credit card balances.
"Medical expenses are costs that consumers can't avoid unlike other discretionary purchases that they're cutting back on. So why not get into financing it?" he said.
Of course:
But just like any other credit card, one missed payment can trigger an interest rate jump up to 27%.
Now of course one need to think who needs to take a loan (which is what a credit card charge is) in order to see a doctor? Hmmm, let me consult my crystal ball. The reply is: People who cannot afford paying for health care themselves.
Let's face it, if one pays the entire balance every month and does not incur interest payments and other various fees - everything is cool. But we don't live in Lala-land, and the credit card executives know it. They know that people will not be able to pay the full balance every month but they also know that most people are basically decent - they do want to pay their debt. In fact, their entire business model is based on these two facts.
So in this trying times, when the number of uninsured skyrockets, out of their goodness of their hearts, in come the credit card companies and offer their help.
"Hey Johnny, what will it be this month? Paying the electric bill or paying for your prescription? Don't you worry - With MC you can do both!!!!"
Now, if this is the immediate image that comes to your mind:
You will not be far off the mark.
Bad for your health? One thing that is clear is that the moderate-to-low income consumers who will be most tempted to use credit cards to pay basic medical expenses are the ones who can least afford to take on more debt.
"[It's] a worrisome trend," said Mark Rukavina, executive director of Access Project, a nonprofit consumer health advocacy group. "Credit cards give an illusion of security," he said. "It will just delay the day of reckoning and could become the final push into bankruptcy." He advises that, "Unless there's a risk of losing life or limb, don't use them."
In a way, this scheme is a public option.
At some point, it will be time to pay the piper. When a new wave of defaults will hit the credit industry these fat cats will rush to congress and ask for a new injection of public funds so they could continue to supply their services to the public (and pay bonuses too, but think of the children!).
Hence, taxpayer money goes to health care cost! Everyone wins!
Paraphrasing Mel Brooks: It's good to be a vulture.
UPDATE:
- It has been pointed out in the comments that using credit card for health expenses in nothing new. While this is true (I am no exception), the new trend here is that the credit card companies are going to target vulnerable segments of society. They are going to create "customised, synergised whatever-shit-ised" credit products to people who can ill (pun intended) afford it.
Think about this scenario: Joe loses his job and his insurance.Unfortunately in the process he does not lose his medical chronic condition.
Now, SOB#1 from Joe's previous health "insurance" company calls (for a fee) SOB#2 from the credit card company and tell him that Joe has just lost his insurance.
SOB#2 immediately starts bombarding Joe with "special" credit card flyers with a lot of fine print.
Is the system great or what?
- My humble apologies to the vultures. They have done nothing that should make us compare them to credit card executives. I am truly sorry.