Medical Credit Cards: 2021 Complete Guide To Medical Credit Cards and Medical Financing
By: Michael Wong
Disclosure: Michael Wong is a cofounder of Walnut. Walnut is a modern and ethical option for people looking to split their medical bill into affordable monthly payments. Find out more at hellowalnut.com
For decades, the trusty credit card has been a staple in the American wallet. Many have depended on this 3×2 in. card to help them pay for expenses they otherwise couldn’t afford. More recently, with the meteoric rise of medical debt, a specialized type of credit card has materialized - the medical credit card.
For people unable to cover medical expenses upfront, a medical credit card like CareCredit, helps cover the expense and allows the user to pay over time. However, medical credit cards may not be for everyone and many come with significant pitfalls that can end trapping users in a debt cycle. So in this article, we are going through a complete guide to covering hospital and medical bills with a medical credit card.
What Is a Medical Credit Card?
A medical credit card is similar to a regular credit card, except it is used specifically to cover healthcare expenses. Additionally, these cards usually cover certain services and may be used only with certain medical providers. Here are some services that medical credit cards can cover:
Unsurprisingly, many have looked for alternative options like medical credit cards to cover their expenses. Many have argued that the medical, veterinary, and dental credit cards are filling a need for cash-crunched users, but others point to the high interest rates and possible predatory lending. Before you decide whether or not a medical credit card is right for you, there are some unique and distinct advantages and disadvantages that come with using a medical credit card. Let’s weigh the pros and cons below:
What Are The Benefits of a Medical Credit Card?
There are some clear benefits of using a medical credit card. These include:
What are the Cons of Medical Credit Cards?
What Are Some Factors I Should Consider?
Here are a few key factors to consider when shopping for medical credit cards:
Does My Provider Accept Medical Credit Cards: Again, medical credit cards only work for certain procedures and with certain providers. If your provider does not accept this type of payment, then it’s a non-starter. However, talk to your provider - they may offer alternative financing and payment plans.
Deferred Interest Rate Terms: To avoid a surprise interest hike, scrutinize the terms of your medical credit card. Make sure you read and understand every line. Find out what the deferred interest rate terms are, and make sure you are able to pay off your loan before then if possible.
There are a ton of online calculators that can help you visualize and play with the numbers. Because it can be a monumental penalty, it doesn’t hurt to set a calendar alert or automatic payment plan to make sure your debt is paid off by the end of the promotional period.
Late Payment Fee: Not only does making a late payment kick in deferred interest, but you may also be charged a late payment fee.
Time For Approval: While most applications are quick, some applications are lengthier than others. Additionally, some take time to send you a physical credit card.
Is A Medical Credit Card Better Than A Regular Credit Card?
Oftentimes, the answer is no. While they are similar (allows you to pay-over-time), medical credit cards are more restrictive and have more opaque terms. There are also many benefits of a traditional credit card over a medical credit card. These include:
In the end, if you are adamant about using medical credit cards, or find yourself in a situation where it is your only option, please make sure to understand all the terms. This can prevent a medical emergency from becoming a financial one.