Most of life's costlier
occasions have prescribed financing options: buy a home, get a mortgage; send a
kid to college, save in a 529 plan or get student loans; need a new car, sign a
lease or take out a car loan.
But what do you do if you
want cosmetic surgery? In 2010, 13.1 million people underwent a cosmetic
procedure in the U.S. -- a figure that is up 5% over 2009, and which cost
patients a whopping $10.7 billion, according to the American Society of Plastic
Break it down, and the
figures are steep. ASPS reports that breast augmentation costs almost $4,000,
nose jobs $4,300 and facelifts $6,231 (not including surgical facilities,
anesthesia and other fees, which can add thousands more to the final bill).
And insurance doesn't
typically pitch in to help. "Consumers should be aware that cosmetic
surgery is not covered under insurance, so all of the expenses must be paid out
of pocket," says Kevin Kautzmann, a New York City certified financial
planner. Only in rare instances, such as reconstructive surgery after an
illness or accident, will insurance cover the costs.
So what are your payment
Consider Kathy Riffey, a
Baltimore medical insurance analyst who recently lost 40 pounds. The resulting
saggy skin caused her to seek a breast lift and implants, and she did not have
$8,000 saved to pay for the plastic surgery procedures.
With the aid of her
plastic surgeon's finance office, she chose one of the medical credit cards on the market. With an introductory 0% interest rate for six months, followed by a moderate rate hike, Riffey opted for a 24-month
plan, for which the bill is just $167 per month. "It was a lower interest
rate than a credit card with better payment plan options," she says.
"And, as I pay it off, I can use the remaining credit for braces, which I
plan to get."
If you are considering
plastic surgery, here are some payment methods to explore:
care or medical credit cards
Medical credit cards are the
latest wrinkle in borrowing for beauty, according to a July 16, 2011,article in the Wall Street Journal. Business is booming for the cards,
which only cover medical expenses and are often offered as a financing
option to cosmetic surgery patients.
Pros: Health care credit cards often come with attractive 0% promotions, and some can
have reasonable interest rates and payment plans. Since they are limited to
medical expenses, they can lend "a sense of control if you tend to
overspend" on regular credit cards, says Billy DeFrance, an El Paso,
Texas, certified financial planner.
Cons: There has
been a spate of predatory lending allegations
against health care card lenders, as well as lawsuits against medical providers
who signed unknowing patients up for the cards. Sometimes the cards were
marketed as having no interest, or the interest was applied retroactively to
the entire balance rather than the remaining balance if a payment was missed or
not paid off during the 0% introductory period. Also, medical providers may
have received commissions from the card issuers for new cardholders or charged
procedures to a patient's card before they were performed. And if you miss a
payment, the default APR can rise to 30% in some cases.
the card and read the fine print. Do not pay for multiple procedures upfront --
such as a series of Botox injections -- but insist on paying as you go. "A
surgeon's job is not to determine whether a patient can afford the procedures,
but rather to communicate whether the procedures can achieve the patient's
goals," says Dr. Ariel Rad, director of aesthetic plastic surgery at Johns
Hopkins School of Medicine in Baltimore. "Patients should to take a step
back after the consultation and ask: 'What procedures do I really want or
need?' and 'What amount can I really afford?'"
. Regular credit cards
You can use an existing low APR credit card or apply for a new card with a 0% introductory period to pay
for the procedure(s).
the card has a reasonable interest rate, this can be an affordable way to pay
for the surgery while you maintain or even build your credit. Plus, you can
rack up cash back if the card offers it.
Cons: A large
purchase such as cosmetic surgery can tie up your credit line and reduce your credit utilization ratio (which may lower your credit score) while you pay
it off. If you can't afford to pay it off promptly, you may need a second
facelift before you've paid off the first.
pay more than 10% interest, Kautzmann says. Don't add other purchases to the
balance. Pay the balance off before the introductory rate expires, and don't
charge more than 30% of your available credit.
Another option: A personal loan from your local
bank or credit union.
the interest rates of an unsecured loan from a financial institution run close
to those on credit cards (depending on your creditworthiness and ability to
qualify, of course), bank loans have fixed interest rates and a fixed amount of
time in which to repay. Plus, if you've never taken out a personal loan before,
it can boost your credit rating (by showing a variety of types of loans you've
repaid) -- provided you make the payments on time until the repayment term is
complete. And, unlike a credit card, you can't add more to the balance.
Unsecured loan interest rates can add quite a bit to the final cost (in
interest charges) of your elective procedure. As of July 19, 2011, rates vary
from 5.42% to a high of 23.37%, with an average of 11.43% (see today's personal loan rates).
Advice: For a
lower interest rate, you may want to ask about a secured loan (where you offer
up collateral against the loan, such as a car or house), although if you end up
being unable to make the payments, you risk losing that property.
4. Home equity loans and lines of credit
are loans against the equity of your house, with interest based on current
Pros: Can be
easily accessible for homeowners and affordable now that mortgage rates are at
historic lows. Interest is tax-deductible for most people.
volatile housing and job market means that you could be left holding your hat
should you be forced to sell your home -- or if interest rates take an
"Using a home equity loan can get people
into financial trouble," says New Jersey certified financial planner John
Egan. "However, some of our clients have used a home equity loan for
plastic surgery because the interest rates are very low -- but as a last
Money in the bank, not earmarked for emergencies.
don't have to borrow or pay interest.
"It may not be sexy, but the best answer for most people is to save each
month until you have the bill covered -- then get the procedure done,"
says Rochester financial adviser Michael Masiello. "We as a society, at
every level, have to get off the merry-go-round of immediate gratification
spending because we want it, regardless of whether we can afford it."
6. Unsecured medical loans
These loans, which can
come in the form of personal loans or credit cards, and are often brokered
through third parties, such as doctors or brokers.
Pros: If you
have a low credit score and have trouble finding other sources of financing,
this can be a viable option.
rates tend to be high or can balloon after an attractive introductory offer. If
you have a co-signer and default on the loan, that person's credit will be
damaged -- not to mention the hit your relationship may suffer.
Advice: If you
choose this route, websites such as MyMedicalLoan.com
and eFinancing-Solutions shop
around for the best deal in exchange for a fee. As always, read the fine print,
and consider whether financing cosmetic surgery at a high interest rate is
truly within your financial goals.
Doctor payment plans
Some doctors will work with patients to
create a payment plan that works with their budgets, although most require
payment in full prior to the surgery.
plans usually don't include interest. Doctor's offices that do offer financing
typically have the flexibility to create a plan that works for each patient.
Missed or late payments probably won't show up on your credit score.
loans can still go to a collection agency. Failure to pay could affect your
relationship with the doctor if you need or want future procedures.
8. 401(k) loans
Most 401(k) accounts allow participants
to borrow up to 50% of the vested balance up to a maximum of $50,000.
Repayments are automatically deducted from your paycheck over a period of up to
quick, no impact on your credit rating, low interest rates (in addition to a modest origination fee). You pay yourself the interest
-- not a credit card or bank.
repay the loan with taxed money, creating a situation in which you pay double
taxes since you will pay taxes when you eventually withdraw the money in retirement.
If your plan doesn't allow you to make contributions while you're paying off
the loan, you lose out on tax benefits and asset growth for the repayment
period. If you leave your job for any reason before the loan has been repaid,
you must repay the 401(k) loan or else it is reported as taxable income. Plus, if you are
younger than 59 1/2 years old and leave your job, you suffer an additional 10%
penalty. "Depending on your tax bracket, you could stand to lose up to 45%
of the loan balance to federal income tax or more if there is state income
tax," says New York City financial planner Jeffrey Woolf.
9. Loans from family and friends
relative with plenty of dough? What about a friend who just came into some
money? Borrowing from friends and family can be
tempting. Consider a site such as LendingKarma.com
to track and document the exchange.
Pros: If you
can't get credit elsewhere, it might be your only option. Terms can be
excellent. Your loved one may be flexible should you make a late payment.
Cons: You will
feel really bad if you default on the agreement. If you don't pay interest, the
lender doesn't stand to benefit financially. It jeopardizes the relationship.
Thanksgiving could be hell.
Dr. Michelle Copeland, a New York City
plastic surgeon, has seen patients receive gift certificates for procedures or
set up funds through which loved ones can contribute money towards their
Pros: You get
the gift you want (instead of that tacky holiday sweater or that
crazy-expensive wine bottle opener you can't wait to regift). You don't have to
come up with the money yourself. It doesn't affect your credit (which can be
good or bad). Your request could rally emotional and social support for your
might be too embarrassed to ask. You might not get enough money. Your grandma
could be horrified.
Advice: If you
feel comfortable making this request, consider a reputable site like DepositAGift.com, MyRegistry.com, SmartyPig or GoGift.com where friends and family are more
likely to feel secure depositing cash gifts electronically. Depending on your
motivation, you could even launch a full-blown social media campaign to work
towards your goal.
The advice for everyone
considering optional cosmetic surgery applies: Consider what you can
comfortably afford, shop around for the best financing and the best surgeon,
read the fine print of any financing contracts you sign -- and think hard
about whether lifting, tucking, trimming and snipping is really worth
the drag on your bottom line.