Should You Get a Medical Credit Card?

Many people rack up large medical bills and don't manage to pay them in full on the spot. In fact, the Kaiser Family Foundation reports that almost 1 in 10 Americans has medical debt. 

When you're staring at a medical bill you don't have enough savings to cover, you may have no choice but to find a way to pay it off over time. And that's where a medical credit card could come in handy.

Unlike regular credit cards, which allow you to pay for a wide range of purchases, medical credit cards are only used to pay specific medical bills. Using one of these cards to pay off a balance over time could be a smart move, but there are pitfalls you should try to avoid.

How to open a medical credit card

Many healthcare offices will assist you in signing up for a medical credit card when there's a bill or procedure you can't pay for outright. It's similar to how medical offices will commonly put you on a payment plan where you're handing over a portion of your balance month after month rather than in one fell swoop. Only medical credit cards can actually benefit doctors' offices.

The reason? With a medical credit card, you get approved for a line of credit that's equal to the sum you owe. The credit card company then pays your provider in full so it gets the money, and you then pay your balance over time to the issuer of your card.

There are pros and cons to consider

The benefit of opening a medical credit card is that interest on these cards is often deferred for a period. This means that if you're able to pay off your medical bill quickly, you might avoid racking up interest on it. 

However, if you don't pay your balance off in short order, you do risk racking up interest, and that could make your debt more expensive. You also risk having your credit score sustain damage if you fall behind on your payments (though recent changes to credit reporting have made it so that delinquent medical debts under $500 won't appear on a credit report, and that settled delinquent debts are wiped from credit reports immediately).

If you're looking to get a medical credit card to satisfy an existing debt, compare that option to a payment plan through your provider. See what interest rate each will charge, to get a sense of which is a better fit for your finances.

Also, before you open a medical credit card, see if you have funds you can use to pay off a larger healthcare bill. You may have money in your flexible spending account or health savings account you forget about that might allow you to at least make headway on that bill.

You also shouldn't hesitate to try to negotiate with your provider if you're staring at a huge bill that's apt to be a burden to pay off based on your income. In some cases, your doctor's office might be willing to settle your balance for less than its full amount if paying off the full amount over time will really be a hardship for you.

Finally, people often get stuck with medical bills due to their insurance providers denying their claims. Before you resign yourself to having to pay, make sure your claim wasn't denied erroneously. Something like a billing code error could be enough to result in a denied claim, leaving you on the hook for money you should not actually be liable for paying.