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What Is The Issue With Medical Credit Cards?

medical professional with cash in the backgroundWhen you are sick, you want the peace of mind that comes with knowing that you can afford your payments. This is not the time to be worrying about your finances because you need to concentrate on getting better. Sometimes, the stress is what aggravates the whole situation. So you want to make sure that this is a problem that you will not worry about when you get sick.

This is probably why people opt to get medical credit cards. This is a limited-purpose credit card that you can use on health related costs. Usually, people use this for expenses that are beyond the Medicaid/Medicare coverage – or other private health insurances.

The problem with health care credit cards

While the main intention is a good one, this type of credit card poses a lot of issues. We came across an article from and they mentioned a couple of problems with medical credit cards. They said that using these will not really help you with your health – it could even make it worse. Here are the important facts that are mentioned about these credit cards.

  • It is the health care providers who offer the option to patients. They give the option of paying for the treatment with medical credit cards. Although they do the talking, these cards are owned by financial institutions like Wells Fargo, Citigroup, etc.

  • The cards are usually for expenses that are not covered by government or private health care insurances like dental, audiology, vision and other similar treatments. It can also cover vet-related expenses.

  • The medical credit cards are offered with deferred interest – this means the consumers will not pay interest as long as the full amount is paid back in 6 months. Depending on the card, this can reach up to 2 years.

These facts shows a lot of issues that we should have with these medical credit cards.

  • Since cards are offered through the health care provider’s office, the consumers availing it are not scrutinized for their ability to pay.

  • Since the interest is deferred consumers are more tempted to use it more without considering how much they will end up paying on the service.

  • There is a possibility that consumers will skip negotiating with health care providers.

  • Offering the card to patients is a tricky way to encourage credit card use. Since they are vulnerable, they will be more inclined to accept the card without really thinking about the repercussions of using it.

  • It is a financial trap that will only benefit the health care providers because they will be paid by the credit card company immediately. It will not help consumes but instead, it will endanger them by putting them through so much debt.

  • It shields the rising cost of health care services and the interest rate from the cards will heighten that further.

  • Although the interest rate on the charges will only take effect after a certain period, it will be imposed on the original amount – and not the current balance. So let us assume that the patient has a $1,000 bill and they have been paying without interest for the last 6 months. When the interest rate kicks in, they will still be charged on the original amount owed – $1,000.

  • Those offering the credit cards do not explain all of these and they are not held accountable if the patients misunderstand the details of the card. This is not yet covered by any law that protects medical credit card users.

What is sad for this scenario is the fact that those who are using it are usually the elderly or low income families who have no cash or health insurance to help with medical expenses. This is definitely an issue that the government has to address to head off any lasting problem in the future.

Is it wise to rely on cards for medical expenses?

In the end, we are confronted with the question about using credit cards for emergency situations. What are the emergency fund best practices that you should follow? Does it include the use of medical credit cards?

In all honestly, it is unlikely that this will be one of the practices that you should follow. Using credit cards for emergency situations means you are more likely to make the wrong financial decisions. You will be in a vulnerable state and that makes you in an irrational state of mind.

The best option for you is to build up your cash emergency fund. That way, when you need the money for your medical expenses, you don’t have to worry about it. When you pay with credit cards, you still have to think about where you will get the money to pay for that. After all, you paid with the creditor’s money – not your own.

If you build up your cash reserves and you get in an emergency, you can pay with cash. We all know that it is more psychologically restricting to pay in cash and that makes us more hesitant to spend. It will encourage us to negotiate with health care providers for a lower rate on the services they will give us.

If you like the additional security, that is when you should use medical credit cards. But you should never use it as your primary source of funds.

In case you have acquired so many debts already, here is a video that will tell you where to find credit card debt help.

What You Need To Know About Medical Credit Cards

If you’ve been hit by a huge out-of-pocket medical bill, you might be tempted to sign up for a medical credit card. Companies such as Wells Fargo, Citigroup, GE capital and J.P. Morgan Chase offer these cards. They provide a credit line specifically to cover medical procedures and treatments for your entire family – including pets. These cards are becoming more and more popular due mostly to rising healthcare costs. However, it’s important to understand that one of these cards will not reduce your debt. It would only serve to increase it. One member of a Boston-based consumer advocacy group pointed out that the irony that “these cars are probably best suited to people who already have financial resources.”Stethoscope strangling money as in medical bills

How these cards work

The way medical credit cards work is similar to other credit cards. You take out a loan to pay for your treatment and then pay the money back over time. These cards can be used for most medical care, dental visits, vision care, cosmetic treatments and surgeries, veterinary care and hearing care. Most people who sign up for one of these cards do so at the office of their healthcare provider. The card may come with 0% interest for as long as you pay each new charge within a certain time, which are usually six to 24 months. Some medical credit cards have extended payment plans for up to 60 months at a fixed interest rate.

The devil is in the fine print

Before you sign up for one of these cards make sure you read the fine print. If you’re facing a big medical or dental bill, a card where you pay no interest can seem like a terrific option. But most require that you make a minimum monthly payment and if that payment is late, your interest rate could increase drastically.

To avoid interest charges

If you make your monthly payments on time and pay off each of your charges within the allowed time period, you can avoid having to pay any interest. However, if you carry your balance past the promotional period, you could be subject to high interest rates of 24% to 30% of the original purchase amount and these rates could be retroactive to the date of your purchase.

Be aware of your options

Fortunately, there are options available that could help you pay for that medical or dental procedure and without the danger of ending up with a 30% interest rate. One of the best is the no-interest payment plans offered by many healthcare providers. Most of these providers will even discount your bill if you pay cash. In fact, I have seen medical bills slashed by hundreds of dollars because the patient paid in cash.

If your medical credit card debt spirals out of control

Medical credit card debts can spiral out of control just like any credit card debts. If this happens to you, you would be well advised to look at some alternatives for getting it under control. Many families have found help through consumer credit counseling. Others have been able to use the equity in their homes to obtain debt consolidation loans and used the money to pay off their medical credit card and other debts. A third way to manage those debts is through debt settlement. It’s a way to consolidate debts without having to borrow more money. In fact, debt settlement can actually be used to reduce debts.

How debt settlement works

Debt settlement is sometimes called debt negotiation. This is because it requires you to negotiate with your creditors to get your balances reduced. You’ll need to make no payments on any of your unsecured debts for probably six months before you contact your creditors and offer to settle with them. Your settlement offers would typically be 40% or 50% less than you owe. Many lenders will settle if you can convince them that it’s in their best interests. Of course, you would need to have the cash available to pay your settlements. But if you do have the money, debt settlement can be an excellent way to pay off those medical credit card bills and any other debts within a reasonable amount of time.

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