Have you been surprised to find that a medical procedure you need is not covered by health insurance or Medicare? You are not alone. Nearly one-quarter of adults have been hit with major unexpected medical expenses, averaging between $1,000 and $1,999, in the prior 12 months.
When you are facing, say, an emergency root canal or expensive hearing aids, there aren’t many good ways to finance those medical needs if your insurance does not cover them. Few doctors and health-care providers offer extended payment plans. That means when you are in ill health or struggling physically, it’s easy to pile up high-interest debt.
One solution for these surprise expenses: A medical credit card.
How it works: A medical credit card is similar to a regular credit card except that it is a credit card for medical expenses such as elective surgery…dental work…ER visits…high copays and deductibles…even veterinary services for a pet.
Medical Credit Card Advantages
No fees or interest
The cards have no annual fee and a promotional “interest-free period” of up to 24 months, allowing you to break a large expense into more manageable payments.
Convenience
You may have seen these cards marketed in doctor’s offices or hospitals. You often can get instant credit approval on the phone right in your health-care provider’s office.
Easy terms to qualify for credit
You may be able to qualify even if you have imperfect credit or a credit score lower than a traditional lender requires.
But there is a catch: Like department-store charge cards, medical credit cards require you to make on-time minimum payments each month and pay off all the debt by the end of the promotional period. Otherwise, you will be charged deferred interest on the entire original amount of debt, not just the remaining balance…and the interest rates you are charged retroactively tend to be much higher than standard credit cards.
Two Medical Credit Cards Worth Considering Now
The CareCredit Card, offered by consumer-finance giant Synchrony, is accepted by a network of more than a quarter million providers and hundreds of hospitals and health-care systems. The card offers interest-free periods of six, 12, 18 and 24 months on purchases of $200 or more. The annual percentage rate (APR) can be as high as 32.99% (with a 39.99% penalty rate), and there is a maximum credit limit of $25,000, depending on your credit history, income and existing debt. CareCredit.com
The CareCredit Rewards Mastercard has the same conditions as the basic card above but can be used both in the CareCredit network as well as anywhere else Mastercard is accepted. For eligible purchases in the CareCredit network, you earn four reward points per $1 spent. Other purchases earn one or two reward points per $1 spent. Points can be redeemed for statement credits, travel, gift cards and merchandise.
Alternative Ways to Pay Medical Expenses
If you are concerned about steep charges for failing to pay off your medical credit card debt within the promotional period, consider these options…
Traditional credit card with an introductory 0% APR
These cards offer 0% interest for 15 to 21 months. At the end of the promotional period, you accrue interest only on your remaining balance. Drawback: You need good credit to qualify for a 0% promotional card, generally a credit score of 690 or higher. One to consider…
Wells Fargo Reflect Card is interest free for up to 21 months for both new purchases and balance transfers. Your APR can range from 17.24% to 28.99% depending on your creditworthiness. On balance transfers, there is a fee of $5 or 5% whichever is greater. Creditcards.wellsfargo.com/cards/reflect-visa-credit-card
Flexible financing options on your existing credit card
Large providers may allow you to turn your available credit line into an installment loan (at a lower ongoing APR) or break up an individual card transaction into predictable monthly payments on which interest doesn’t accrue. One to consider…
American Express credit cards with a “Plan It” feature. This allows you to pay for a qualifying purchase of $100 or more in fixed monthly installments. There is a fixed, upfront monthly fee instead of interest. That fee and your fixed payment are added to your minimum payment due each month. American Express allows you to pay off the installment plan early without penalty. Americanexpress.com/us/credit-cards/features-benefits/plan-it/faq/
Hybrid credit card
This gives you the flexibility of a cash-back rewards credit card and the predictability of a personal loan. You can use the card to make purchases and then pay the bill in full, similar to a regular credit card. But if you carry a balance beyond the due date, there is an option to pay down the bill in equal monthly installments at a fixed interest rate within a set repayment period. One to consider…
The Upgrade Cash Rewards Visa. The APR on purchases typically ranges from 14.99% to 29.99%. You earn rewards of 3% cash back on health-related spending…1% on other purchases. Personal loans made through Upgrade can offer APRs as low as 7.99%, but terms vary widely depending on creditworthiness and what you qualify for. Upgrade.com/upgrade-card/triple-cash
