Medical Credit Cards: Should You Get One?

What are medical credit cards?

Medical credit cards are offered by lenders (like GE Money and Citibank) to consumers facing large out-of-pocket medical expenses.

Often, doctors and dentists will have applications for these cards right there in their offices, just as Best Buy might offer you a credit card in order to finance a big-screen TV or a new laptop. Patients about to undergo expensive elective operations, like LASIK, might opt for a medical credit card because it will typically offer 0% financing for 12 months.

Medical credit cards are convenient for doctors because they can automatically bill the card and receive payment for services. No more waiting for the patient to pay the portion they owe.

Out-of-pocket medical expenses are out-of-control

It’s no surprise that lenders are getting into the medical credit card market. Americans are spending more money each year on expenses not covered by insurance, including prescriptions, office visit co-pays, elective and cosmetic surgeries, as well as the portion of necessary medical procedures not covered by insurance (and, of course, an uninsured American must foot all medical bills entirely on their own).

  • Americans spent $294 billion last year on out-of-pocket medical expenses
  • 25% (or $74 billion) of that amount was put on consumer credit cards
  • 60% of the 1.5 million bankruptcies declared by Americans this year will be due to medical bills

Pros of medical credit cards

  • 0% introductory financing (usually for12 months)
  • Limits can range from $1,000 to $25,000
  • A way to pay for medical procedures for you and your family (and sometimes even pets)
  • Automatic billing means a streamlined payment process

Cons of medical credit cards

  • Interest rate could jump to 30% after the introductory period expires or if you miss a payment
  • Like other credit cards, medical credit cards are just another way to accumulate debt
  • They can tempt you into adding extra services and procedures you can’t really afford or don’t really need
  • Automatic billing means your dentist or doctor can charge the card immediately and in advance, leaving you to foot the bill before you’ve had the procedure or before your insurance company has decided how much it will cover
  • Like other credit cards, medical credit cards can harm your credit score to varying degrees: applying for the card, being late or missing a payment, and maxing it out can slightly or seriously damage your score
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Maximize other health benefits first

Before simply charging healthcare costs to traditional or medical credit cards, take advantage of employer- and government-sponsored programs. Here are a few options to save you money on healthcare:

FSA: Your employer may offer a Flexible Spending Account, in which pre-taxed dollars are set aside from your paycheck to be used on medical expenses. Because you don’t pay tax on the money that goes into your Flexible Spending Account, you can save a lot. You elect how much money to put into your FSA. The downside is that you have to spend it within a year.

HSA: A Health Savings Account offer tax breaks for people enrolled in high-deductible health plans. An HSA can be individual-owned or company-sponsored.

Contributing to FSA and HSA plans are a great way to build a medical “emergency fund” because you are putting pre-taxed dollars toward a fund that can only be used for medical expenses.  The key is to plan for medical expenses as far in advance as possible, so you can allot sufficient funds into these accounts before annual enrollment.

HRA: A Health Reimbursement Account is a company-sponsored plan, which means companies choose when and how much they participate. It saves you money by reimbursing you for medical expenses not otherwise covered by your employer-offered insurance.

Visa and MasterCard both offer cards designed to manage FSA, HSA, and HRA accounts. These cards operate more like debit than credit because you can only draw from them as much as you’ve contributed to the above-mentioned plans. For instance, if you elect to contribute $2,000 into an FSA, your employer may issue you a card carrying that balance that you can use to pay for medical expenses at pharmacies and doctors’ offices throughout the year.

Work out a payment plan

Another alternative to using credit cards to pay for medical expenses is to communicate directly with your doctor’s office to figure out a payment plan that works for you. If you find your medical bill overwhelming, don’t ignore it. Let your provider know your financial status so you can try to negotiate a solution. You’ll probably be surprised by how willing they are to work with you. offers 10 additional money-saving tips when it comes to healthcare. And check out the SpendOnLife guide to keeping your medical bills from ruining your credit.

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