Medical Credit Cards: Pros and Cons

En español  | When 67-year-old Beverly Weaver of Sacramento, Calif., visited her dentist, she was blindsided by the diagnosis. “Just about all of my fillings were 30 years old, so they had started cracking,” she says. She had to have two root canals and caps redone—dental procedures not covered by Medicare. The total cost: $8,000, an amount Weaver simply could not afford on her fixed income.

So Weaver applied for a CareCredit card, one of several credit cards that are designated for financing out-of-pocket health care expenses. The cards offer zero percent or very low interest for a fixed period after a medical procedure. Without the card, “I would never have been able to afford the dental work,” Weaver says.

Weaver’s use of a medical credit card had a happy outcome. But some patients have found that the cards place them on a treadmill of old-fashioned plastic debt. For instance, the office of Minnesota Attorney General Lori Swanson is investigating a complaint concerning a 91-year-old woman who used a card to pay for a hearing aid. When her final payment arrived late, Swanson’s office says, the woman received a bill for $1,200 in interest going back to the date of the initial charge.

The cards “may have a longer grace period and zero percent APR offers, but usually they will increase to a similar interest rate percentage as a regular credit card, sometimes even higher,” says José Garcia, associate director for research and policy with the Economic Opportunity Program at Demos, a New York-based research and advocacy firm.

More patients charging medical costs

As Americans seek ways to deal with fast-rising medical costs, the use of credit cards at the doctor’s office is increasingly common. According to global management consulting firm McKinsey & Company, patients charge approximately $45 billion of out-of-pocket medical expenses annually (most of it on regular cards), and that number is likely to rise to $150 billion by 2015.

To attract some of that business, financial services companies are marketing special medical cards. As with general cards, consumers must have a decent credit score to get a card such as CareCredit, which is offered by GE Money.

Other players in the arena include Citigroup’s Citi Health Card and JPMorgan Chase & Co.’s ChaseHealthAdvance Card.

Typically the patient and the doctor’s office will work out a fixed period of time—12 months, perhaps—in which the zero- or low-interest rate will hold if the full amount is paid off as scheduled.

The cards first came into use for uninsured procedures such as cosmetic surgery. In recent years, they have come to finance a wide range of procedures, including root canals, orthodontics, hair restoration, vision correction, surgical weight reduction, chiropractic care, hearing aids and, in some cases, veterinary treatment. But the focus remains elective care that is an out-of-pocket cost even if you have comprehensive medical insurance.

Pros and cons

If you are considering a medical credit card, here are three issues to consider.

Pro: They can provide immediate access to care. Alan M. Tebby, a chiropractor in Charlotte, N.C., says that more patients these days have health insurance policies with high deductibles and out-of-pocket costs. As a result, some delay medical treatments, choosing, for example, to suffer back pain because they can’t afford chiropractic services. With medical credit cards, the patients often go ahead with treatment right away. “That provides the patient with the availability and immediacy of care,” Tebby says.