There is a big difference between the way that a traditional patient financing card assess interest and the way that the Advance Card Care does. With most traditional patient financing options, interest begins accruing from the day of the transaction. These options can offer some form of “same as cash” financing in which interest charges can be waived, but only when patients pay off their entire balance in full and within the promotional financing period.
On the other hand, the Advance Care Card offers true 0% financing for as long as 14 months. This interest free promotional financing even applies when cardholders continue to have a balance after the promotional financing period ends. Only then does the standard interest rate apply.
What traditional patient financing costs
Let’s take a look at the costs to a patient who finances a procedure that takes him two years to pay off. With a traditional patient financing option, he is offered $5,000 of one year of “same as cash” financing, after which he incurs interest charges at the standard rate of 24.99% APR.
If he is somehow able to pay off his entire balance within a year, then he owes no interest. But if he pays it off steadily over two years, he must pay $267 a month for a total of $6,408. Of that amount, he has paid $1,408 in interest charges.
What patient financing costs with the Advance Care Card
Now let’s consider what would have happened had he chose the Advance Care Card. With good credit, he will qualify for a card with 14 months of interest free financing. Only after 14 months will interest begin to accrue, based on the unpaid balance at that time.
So if the cardholder made the same $267 monthly payments, he will have paid off $3,738 and have a remaining balance of $1,262. The cardholder will then be incurring interest on that balance at a rate of between 10.99% and 22.99% APR, depending on his credit worthiness at the time of his application.
So in the best case scenario, he makes 5 more monthly payments of $267 and incurs only $35 in interest charges at 10.99% APR. Yet even if he received the less favorable 22.99% rate, he would still only incur $74 in interest charges. The likelihood is that most applicants will receive rates between 10.99% and 22.99% APR
Conclusions
The differences between the Advance Care Card and traditional patient financing options are not minor, they are dramatic. In the above scenario, a patient saves over $1,300 in interest charges by choosing the Advance Care Card. Certainly, patients who can pay off their entire balances within a year will not pay any interest with either of these patient financing options.
The corporations that offer traditional patient financing programs only do so because they know that many patients will fail to pay their balances in full during the promotional financing period, and their costs will be far from “same as cash.” Are you willing to bet hundreds, or even thousands, of dollars that you will be able to pay off your financing in time?