Have you ever thought about getting a “medical credit card”? Maybe you’ve seen ads for them at your doctor or vet’s office? Each year, Americans spend billions of dollars on health care costs not covered by insurance. New research shows more people are paying with plastic and even using “medical credit cards”. What are they and what are the pitfalls?
When stacks of medical bills piled up, Angela Gifford faced a terrible dilemma. Her husband, who recently lost his job, needed two surgeries not covered by insurance. How would they pay $6,000? “He was in such extreme pain.”
Dog owner Nancy Byron was panicked. Sasha needed emergency surgery. How was she going to come up with $5,000? “It was absolutely life and death.”
Both women say opening medical credit card accounts helped them pay their hefty bills. These are actual credit cards meant only for medical expenses… accepted by certain doctors, dentists, cosmetic surgeons, chiropractors and even veterinarians.
Byron says the card was a life saver. “Had I not been able to get the money, my dog would be dead.” Gifford relied on the line of credit to help her husband. “We couldn’t have afforded the surgery.”
Experts like Ben Woolsey with CreditCards.Com say specialized medical credit cards are very appealing -- especially in today's rough economy. “People who don’t have the money in the bank to pay for these procedures are much more likely to sign up for a medical credit card.”
But consumer advocate Mark Rukavina from the Access Project warns medical credit card users could face some expensive potential pitfalls. “They may be amplifying the problems they have for these bills they’re struggling to pay by taking on additional fees and paying high interest."
The key to avoid paying more? Woolsey warns make sure you stick to the terms and conditions of the card! “They’re typically marketed as a no interest payment option but unless the consumer pays off the balance in full during that promotional period there are significant interest charges involved.” At least sometimes.
When can a medical credit card cost you more?
- If you fail to pay the balance within the promotional time you could face retroactive interest and penalties.
- Late or missed payments could result in more fees and are reported to the credit bureaus.
Byron says she was never offered zero percent interest--- and her 14.9% interest rate hits a whopping 26% if she pays late. “I think it’s sad when you’re forced to deal with an incredibly high interest rate as a result of a tragedy.”
Gifford was lucky. She managed to pay off her balance within the one-year interest free promotional period—but warns others to be credit conscious. ”Credit cards can be dangerous. They can be dangerous, it depends on how you use them.”
Attorneys general in New York and Minnesota are investigating some medical credit card companies for aggressive marketing tactics and signing up patients without their knowledge.
Consumer advocates say you may want to try negotiating a payment plan directly with your health care provider. Also check with your state to see if you qualify for public assistance programs to help pay for medical bills. If your insurance company rejects covering a procedure some states have agencies that you can appeal the decision.
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