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Medical credit cards provide a financing option for medical procedures or health care expenses. While they are much less common than regular credit cards, they are similar in that they are a revolving credit line that you must apply for, but often come with restrictions and caveats that limit their use. Learn more about the pros and cons when it comes to medical credit cards.
What Is a Medical Credit Card?
A medical credit card is simply a means of accessing short-term credit marketed toward consumers with medical expenses. Similar to other types of credit cards, medical credit cards may come with promotional interest rates, such as an introductory 0% APR for 18 months. Some medical cards offer ongoing interest rates below what most other credit cards charge, but some can charge interest rates as high as the most expensive credit cards.
How Medical Credit Cards Are Different
Some medical credit cards have more lenient underwriting standards and accept all patients, regardless of credit. Some never report payments to the credit bureaus.
Also like many store credit cards, medical credit cards’ 0% introductory offers come in the form of deferred interest charges. This means that, if you don’t pay off your entire balance by the end of the promotional period, you may owe interest charges for some of all of your original balance retroactively from the day that you charged a medical procedure to the card.
How Does a Medical Credit Card Work?
Medical credit cards function on the same premise as any credit card: They’re loans from the card issuer that allow the user to make a payment for goods or services from a provider, in this case a doctor or other related health care professional, like a dentist, eye doctor or even a veterinarian.
The terms and conditions may vary greatly depending on the terms being offered at the point of service or in cooperation with the medical provider. In most cases, unlike a traditional credit card, a medical credit card can only be used with a specific medical provider or providers and cannot be used to make other types of purchases.
Should You Use a Medical Credit Card?
With high interest rates and limited acceptance, medical credit cards are not a product that makes sense for everybody and warrant serious consideration of the major drawbacks involved.
Medical credit cards are often viewed as a predatory financial product, marketed toward people in a tough financial situation.
In its 2023 Medical Credit Cards and Financing Plans Report, the Consumer Financial Protection Bureau (CFPB) said that while 20% of all people from 2015 to 2020 were charged deferred interest on their healthcare purchases, the percentage jumped to 34% for those with credit scores below 619.
One reason for the discrepancy is that consumers with lower credit scores are often given less time to pay off their balances before the deferred interest kicks in. The CFPB found that 56% of subprime borrowers who made deferred-interest medical purchases in 2020 received a promotional period of 11 months or less compared to just 41% of superprime borrowers.
Medical credit cards are also often seen as products used to entice people into elective medical procedures they would not otherwise be able to pay for. For example, Care Credit, a major issuer of medical credit cards, lists facials, eyelash extensions and hair and nail services among the procedures that the company will finance.
A medical credit card might make sense for those who can get a 0% interest rate and are looking to finance an elective procedure they have already budgeted for, such as LASIK eye surgery or laser hair removal.
Even with moderate interest rates, most people are better off paying cash for elective procedures. For those looking to pay off unexpected medical costs incurred by non-elective emergency medical care, there are many other options available worth considering instead of a medical credit card. We do not recommend using a medical or any other type of credit card to finance medical procedures of any kind if it can be avoided.
How To Get a Medical Credit Card
Applications for medical credit cards are commonly offered at the point of payment for medical service in cooperation with the medical providers. They may be likely to be offered up front for financing elective medical procedures or other high-priced medical issues.
This may be presented in any number of ways, including receiving a bill after an appointment with a mailer offering a medical credit card as an option to defer payments or a cosmetic surgery provider offering a means of deferring payment with no interest for several months when meeting for an initial consultation. Some people may be presented with a medical credit card payment option on the tail end of a dental procedure.
Aside from healthcare providers, information and applications for medical credit cards can be found through most of the same methods one might use for a regular card. This includes banks and financial service providers who may offer medical credit cards on websites. Those interested in a medical credit card should be wary of advertisements and unknown providers.
Alternatives to Medical Credit Cards
Medical credit cards are far from the only option available to pay for medical care. Often, there are a number of better options available.
Save for Future Medical Care
If one is able to either defer care or budget for future medical care, putting money aside for future healthcare can ensure the cash flow to cover medical expenses. This can be as simple as socking away money into a savings account, but there are also a number of tax-advantaged ways to save for health care.
Depending on the nature of a patient’s procedure and insurance, they may have the option to defer part of their income into a Health Savings Account (HSA) or a Limited Purpose Flexible Spending Account (FSA) and pay for it with pre-tax dollars.
Ask for a Payment Plan or Financial Assistance
Many medical providers, especially nonprofit clinics and hospitals, have some sort of financial assistance available. Those unable to cover a medical bill can ask a provider if they offer any form of support. This might simply lead to a reduction in one’s bill based on their ability to pay. It could also take the form of a longer-term payment plan based on income or another arrangement, all of which will likely be a better deal than paying with a medical credit card.
Some providers are even willing to offer an interest-free payment plan with no income verification for a year or more.
Negotiate a Reduced Bill
Some providers may be willing to accept a reduced amount if a patient is willing to pay immediately and in cash. Those with enough cash to pay for a portion of the bill can try to negotiate an immediate payment for a lower amount than their provider is requesting. Patients that successfully negotiate a reduced payment should make sure they receive a revised payment agreement in writing before any payment is made.
Use a Personal Loan
A personal loan is another option for those who want to access credit for help with a medical bill but want to avoid the high interest rates of a credit card. Since personal loans generally offer lower interest rates than credit cards, this may be a good option for those who need to finance a medical expense over several years.
Utilize Other Sources of Financing
Patients in some situations may have other sources of financing available likely to prove more practical and cost-effective than a medical credit card. These include taking out a home equity loan, taking a loan from a retirement savings account, opening a 0% APR credit card or even seeking help through assistance programs in one’s state or through an employer.
Best Credit Cards for Medical Expenses
The best credit card for any one person depends on specific goals and financial situation. It’s just as important to understand the pros and cons of a medical credit card as it is for any credit card—and the best credit card for medical expenses might not be billed as a medical credit card in the first place. In any case, understanding a card’s terms and conditions is vital, including the card’s APR, billing cycle and fees. The best credit cards for medical expenses strikes a balance between fees and interest rates that makes sense for the individual.
CareCredit is the most common provider in the medical credit card market and is a first choice for many patients, though it charges a very high interest rate after the deferment period is over, meaning those who are unable to pay will rapidly accrue interest on overdue balances—a steep slope toward bankruptcy and ruined credit. A variety of other options make up a much smaller portion of the market, including offerings from Wells Fargo, AccessOne payment plans and iCare Financial.
Bottom Line
Medical credit cards may make sense in some specific cases, but to most people they represent risky financial products designed to convert medical bills into high-interest loans or entice people into elective procedures they cannot afford.
Those shopping for an elective procedure and considering a medical credit card should proceed cautiously if they are using it to help afford the procedure. Those who have incurred unexpected medical bills should remember there are often many options available to help finance or forgive medical bills, at least in part. Ask a provider what options are available and consider other sources of funding. There is almost certainly a better option than financing healthcare on a medical credit card.
