The health care provider, meanwhile, receives immediate payment for services and isn’t burdened with having to go after delinquents. Many providers that used to provide their own financing to patients now urge them to get medical credit cards.
Con: The cards can generate big interest costs and hurt your credit score if you miss just one payment. A medical card has the same impact on your credit rating as a regular card. “If you’ve got another open account on your credit report, that can be damaging if you’re trying to get the best terms on a refinance or buy a car,” says Benjamin Wogsland, a spokesman for the Office of Minnesota Attorney General Lori Swanson.
Debt to a doctor or hospital, in contrast, does not normally figure in your credit score, unless it goes unpaid and is sent to a collection agency.
Moreover, if you’re late making a payment, that might also trigger higher interest rates on other lines of credit as well.
Pro: The cards let you conserve your cash. Rather than paying a big medical bill all at once, you might be better off letting the funds bear interest in a money market account. With medical cards, patients can spread their payments over a period of time “and save cash for gas and groceries and other things,” says Marjory J. Rosser, senior vice president of consumer marketing for CareCredit.
Con: The cards may result in payment for treatment that you don’t get. Some procedures, such as a root canal, take multiple visits to complete but will be charged in one sum up front. If you do not pursue the full treatment, there can be hassles to get charges reversed, says Mark Rukavina, executive director of the Access Project, a Boston-based organization that works to improve health care access.
In some cases, cardholders have been told that the money can’t be refunded, according to media reports.
Pro: The cards can make record keeping easier. “We hear a lot from our cardholders that they like being able to put all their out-of-pocket health care expenses in one place,” says Rosser. Since the card provides a dedicated line of credit for certain types of health care expenses, it enables people to better track and budget for care.
Con: The cards can blur the lines between health care and financial services. Though you can apply directly to a financial services company for some medical credit cards, they are typically introduced via a health care provider. “If you go to your doctor to get treated, there’s a certain relationship—a trust there and you don’t expect to get aggressively pitched a credit card,” says Wogsland.
Some consumers have accused health care providers of signing them up unwittingly for health care credit cards, claims that prompted Swanson to file lawsuits against two Minnesota chiropractors last year. At the very least, a doctor may not be familiar with all of the financial implications of a medical credit card, leaving the consumer unclear about how terms will change if the debt is not repaid in time, according to Wogsland.
Whether you should get a medical credit card will depend on your financial situation and the urgency of the medical treatment. Regardless of your ultimate decision, you should first try to negotiate a payment plan directly with your health care provider. You may still be able to get an extended payment plan and often a discount on the fees.
“Once something is put on a credit card, that negotiating opportunity is missed,” says Rukavina.
Tamara E. Holmes is a Maryland-based journalist who writes about health, wealth and careers.