Medical Credit Cards: Here's Everything You Need to Know

If you're facing a big medical or dental bill, your provider may suggest applying for a medical credit card. A medical credit card is a credit card that you can only use for healthcare expenses, many of which offer a temporary no-interest period.

The appeal of these credit cards is obvious. A 2022 Kaiser Family Foundation poll found that about 4 in 10 Americans have delayed or skipped medical care due to costs. But there are several pitfalls to be aware of before you apply for a medical credit card.

How medical credit cards work

A medical credit card is a credit card that you can only use for healthcare expenses. As with a traditional credit card, you'll have a credit limit and a minimum monthly payment. Once you pay down your medical credit card, you can charge up the line of credit again as long as you use it for medical expenses.

Usually, you'll apply for a medical credit card at a doctor's office or hospital. You can often receive same-day approval, allowing you to pay for care immediately.

Traditionally, medical credit cards were limited to services health insurance didn't usually cover, like dental, vision, and hearing services. But medical credit card issuers have expanded their uses. Now, you can often pay for everything from checkups to specialist visits to emergency care.

One reason for the proliferation of medical cards is that issuers focus their marketing efforts on healthcare providers. In the past, providers often allowed patients to pay in zero-interest installments if they couldn't afford the upfront costs. Medical credit cards are replacing many of these payment plans, though, according to a May 2023 report by the Consumer Financial Protection Bureau (CFPB). If you pay using a medical credit card, your doctor bypasses the collections process and gets paid within a few days.

The downsides of medical credit cards

A medical credit card may be convenient if you don't want to pay upfront but are confident you can pay off the balance before the no-interest period ends. But there are several reasons medical credit cards can be especially costly.

Deferred interest

Many medical card issuers advertise that you won't be charged interest if you pay off your balance within a specific timeframe, like six months or 12 months. But that isn't quite the same as a 0% interest period.

Medical credit cards typically charge deferred interest, which means if you don't pay off the full balance by the end of the promotional period, you'll be charged interest retroactively on the entire amount financed. 

For example, say you apply for a medical credit card and use it to pay for a $3,000 dental procedure. When the promotional period ends, you still have a $200 balance. You'll pay interest not just on the $200 remaining but on the entire $3,000 you borrowed. Among customers who wind up incurring interest charges, deferred interest inflated the cost of care by 23% on average, according to the CFPB report.

High APRs

A May 2023 report by the Consumer Financial Protection Bureau found that a typical medical credit card had a 26.99% APR, compared to 16% for an all-purpose credit card. Moreover, many medical credit cards charge a flat APR to all customers, including those with good credit scores.

Fewer protections

Some consumers report difficulty disputing billing errors after paying with a medical credit card. Patients may wind up taking on debt to pay for care that their insurance company should have paid for in the first place.

You're also afforded certain credit-reporting protections when you have unpaid debt that's classified as a medical bill. For example, any medical bills under $500 or that are less than a year old won't appear on your credit reports. But when you pay with any credit card, including a medical credit card, your medical debt loses these protections because it's classified as credit card debt.

Alternatives to medical credit cards

Facing a major medical expense you can't afford is a stressful experience. It's essential to take care of your health, but you also want to consider all options before you charge up a medical credit card. Here are some alternatives:

• Ask for a payment plan. Some hospitals are required by law to offer financial assistance or charity care programs. If you're hospitalized, ask for a copy of the hospital's financial assistance policy, which it's required to provide for free. If you're facing a big bill from a doctor's office, ask if they're willing to work out a payment plan with you directly, even if they're pushing you to apply for a medical credit card instead.
• Contact your insurer. Before you sign up for a medical credit card, make sure your treatment isn't covered by health insurance. Even if you've already paid for a service that your insurer refused to pay for with a medical credit card, you can still file a dispute if you believe the treatment should have been covered.
• Use a regular credit card. Some credit cards have 0% APR offers for up to 21 months. Even if you can't pay off the full balance by the end of the intro period, at least you'll only pay interest on the remaining balance. With deferred interest, you'll be retroactively charged interest for the full amount you financed.
• Take out a personal loan. Personal loans tend to have lower interest rates than credit cards and can usually be used for any purpose, including medical bills.

If you're insured, start by working with your insurance company and finding out what's covered. Appeal if you disagree with the decision. Negotiate directly with your doctor or the hospital, if possible, if you're uninsured or the treatment isn't covered. Only after you've exhausted these options should you consider paying with a credit card or loan.