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The pros and cons of medical credit cards

February 5, 2011 12:00:00 AM PST
Americans spend billions of dollars every year on healthcare costs not covered by insurance.

Many people are paying their healthcare costs with plastic or using medical credit cards.

But these cards can end up costing a lot more than you expect.

Medical credit cards work like most charge cards: you swipe now and pay later.

And, like many credit cards, you may be hit with exorbitant fees or extra charges when your billing statement arrives.

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, and she owed $6,000.

Pet owner Nancy Byron was concerned when her dog Sasha needed emergency surgery that would cost $5,000.

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 at certain doctors, dentists, cosmetic surgeons, chiropractors and even veterinarians.

"Had I not been able to get the money, my dog would be dead," said Byron.

"We couldn't have afforded the surgery," said Gifford.

Experts say specialized medical credit cards are very appealing, especially in today's rough economy.

"People that don't have the money in the bank to pay for one of these procedures are much more likely to sign up for a medical credit card," said Ben Woolsey, director of marketing and consumer research at CreditCards.com.

But consumer advocates warn medical credit card users could face some expensive potential pitfalls.

"They may be amplifying the problems that they have for these bills they're struggling to pay by taking on additional fees and paying high interest," said Mark Rukavina, executive director of The Access Project.

The key to avoid paying more? 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 the balance in full during that promotional period, there are significant interest charges involved," said Woolsey.

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 that could be reported to the credit bureaus.

Consumer advocates say you may want to try negotiating a payment plan directly with your healthcare provider.

If your insurance company rejects covering a procedure, you can appeal that decision.