How Medical Credit Cards Work

When it comes to paying an unexpected medical bill, there’s often no easy way to do it. Unless you have an emergency fund or have plenty of money on hand, paying a big medical bill can be difficult.

Some dentists and other healthcare professionals, such as eye doctors, audiologists and even veterinarians, offer medical credit cards to help patients spread the cost of a procedure over time and make paying for it easier. The credit cards are used to pay for healthcare services that aren’t covered by insurance or Medicare, or to cover expenses a patient can’t afford.

Doctors who provide medical credit cards aren’t providing loans themselves, but are working with third-party companies that offer the cards.

Why Get a Medical Credit Card?
Medical credit cards allow a medical bill to be paid back over the span of months or years without being charged interest on the loan. The interest is deferred, and if the bill isn’t paid off before the interest-free promotional period ends—such as 12 months—then the interest is added retroactively to when the purchase was first made. The interest rates are usually high. One medical credit card provider, CareCredit, has an interest rate of 26.99 percent for new accounts.

Minimum monthly payments are required during the promotional period, though higher payments will likely be needed to pay the balance off during that time. Interest can also be charged if you’re more than 60 days late on a payment, warns the Consumer Financial Protection Bureau (CFPB).

CareCredit gives an example on its website of a cardholder with a $1,200 medical charge with no interest charged if paid in full within six months. A $200 monthly payment for six months would pay off the $1,200 without any interest charged. But if only the minimum monthly payment of $39 is paid each month, then the $1,200 balance would only drop to $1,134 after six months. In this case it would take 96 months to pay off the loan at 26.99 percent interest. The $1,493 in interest paid over that time is more than the amount borrowed in the first place.

Even without a medical credit card, you may be able to pay your bill without interest by asking your medical provider if you can work out a payment plan with them directly.