Medical Credit Cards Are a Bad Idea, Actually

It’s no secret that healthcare in the U.S. is difficult to afford, even for those who have insurance. In fact, roughly, Have some amount of medical debt—and in 2021, more than half of all bills in collections were medical.

High out-of-pocket costs and unexpected bills may make medical financing options like credit cards and loans sound like the best option for paying for everything from hearing exams to elective dental procedures to emergency room visits. Your provider may even promote medical credit cards like CareCredit and medical loans offered by companies like AccessOne, Cherry, and PayZen.

However, while medical cards and loans may be convenient and come with attractive payment plans and promotional rates, you may end up with more debt, worse credit, and fewer financial aid options in the long term, which is why consumer finance experts.

How does medical financing work:

There are two common methods for financing healthcare:

Medical credit cards can be used to pay for services offered by your doctor or dentist—traditionally elective procedures or care not covered by insurance—though you may be able to charge hospital treatment or other bills. These cards often have zero interest for some promotional period (6–18 months), so you could avoid interest if you pay off the balance quickly.

With a medical loan, you pay your bill in installments, which are used to reimburse your provider. As with credit cards, there’s generally deferred interest that jumps significantly after a period of time.

The CFPB notes that medical providers have multiple incentives to offer (or even push) financing options, all of which come down to getting paid more, sooner. For example, medical financing might influence patients to opt for treatment that they would otherwise price shop for, or delay. Providers using these options also get paid in full more quickly and have fewer billing and debt collection hassles.