Medical Credit Card – Benefits and Risks of Medical Credit

Benefits and Risks of a Medical Credit Card

From time to time, many people find themselves facing an unexpected medical bill. If you’re at all strapped for cash, you may find the offer of a medical credit card to be tempting. Medical credit cards can be a valuable tool if you understand how they work. However, if you don’t know how these cards work and when interest is charged, you may find yourself in financial trouble. And if you do determine that a medical credit card is the best option for you, setting and sticking to a payment plan is an important step.

Doctor discussing the option of a medical credit card with patient.

Your doctor will discuss the benefits and risks of using a medical credit card. Ask your physician if he or she offers a payment plan for medical services.

What is a Medical Credit Card?

A medical credit card works similarly to many other credit cards. It is designed specifically to be used to pay for medical procedures. It can’t be used for other purchases. Part of the allure of these cards is that you can often apply for them right in your doctor’s office. Many applicants get approved right there. Medical credit cards are appealing to those who are facing a medical emergency they can’t immediately afford.

For those who find themselves facing unexpected medical bills, taking out a medical credit card can ensure that they get the care that they need right away. Additionally, many veterinary offices accept Care Credit and other medical cards, making them useful for pet medical needs.

Patients repay a medical credit card debt just as they would with any other credit card. They make a payment each month. Medical credit cards offer patients the option of gradually repaying an expensive medical bill, rather than forcing them to find a way to pay the entire bill up front.

How Does the Promotional Period Work?

One thing that sets Care Credit and other medical credit cards apart from regular credit cards is the fact that they include a promotional period. In particular, Care Credit offers a promotional period of six months to two years. During the time of the promotional period, the patient pays no interest. If the patient repays the entire card balance by the end of the promotional period, the interest is waived.

However, many people do not read the fine print of the promotional period. During this period, interest on the balance is still accruing. While the accumulated interest is ultimately waived for those who pay the whole balance on time, those who do not pay the balance in full by the end of the period still must pay interest. And they aren’t just paying the interest that continues to accumulate – those who don’t pay everything by the end of the period have to pay back interest as well. The interest charged on medical credit cards is usually higher than the interest rates of other credit cards.

Of course, if the card is used to cover a relatively small bill, paying some back interest might not be a big deal. For those who use the card to cover large expenditures, it can be financially devastating. While the situation might sound alarming, there are steps you can take to avoid having to pay interest on a medical credit card. If the card can be paid off before the promotional period ends, it can be a helpful payment option. But for those who can’t pay the balance in full in that time, the financial consequences can potentially be damaging.

How Can You Avoid Paying Significant Interest?

While it may sound risky to take out a medical card at all, these cards only become a financial risk if you are unable to pay them in full before the promotional period’s end. To make sure you do this, it’s important to strategize ways to avoid having to pay interest. Below are some of the strategies you can use to avoid paying significant interest (or any interest) on a medical credit card.

Work Out a Plan With Your Doctor’s Office

Many doctor’s offices will allow you to set up a payment plan to cover your bill. This is especially true if it is for a very expensive procedure. Many of these plans do not accumulate interest. If your doctor’s office or hospital has this plan available, this is likely the best way to cover your bill. Use the money you saved in an emergency fund to pay down the bill. If your doctor does not offer payment plans, then Care Credit, or another medical credit card may be the next best option.

Plan Out How Much You’ll Pay Each Month

If a medical credit card is the best available option, it’s important to plan out how you will pay down the debt. While most card manufacturers have an established minimum payment, paying only the minimum amount often is not enough to avoid paying interest. Make sure you first know the length of the promotional period. Then, you can plan out how much to pay each month to cover the amount in full.

Generally speaking, it’s wise to plan to have the card paid off in advance of the promotional period. This way, you have room in case of a financial setback or other issues that get in the way of your payment ability. Because the amount of interest you have to pay can be very significant if you miss the promotional period. It’s vital to make sure you stay on track.

Set Up a Monthly Bank Draft

You can make monthly payments individually. Automatic bank drafts are a good choice in case you forget about a payment. You can adjust how much you want to pay each month. This way, you won’t have to worry about remembering to make on-time payments. You also can change the monthly amount you pay in case your financial situation changes.

In short, medical credit cards can be extremely valuable if you find yourself with an unexpected medical bill. By staying vigilant and making sure you don’t get stuck paying back interest, you can reap the benefits of the cards while experiencing few downsides. Plan, pay off the card in advance of the deadline. You then won’t have to be concerned with paying massive amounts of interest.

Monica Kowollik


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