What is a Medical Credit Card? – Overview
A medical credit card is used to pay for eligible dental, medical, and health care expenses.
Once approved, a medical credit card can help you finance healthcare charges which are not covered under your health insurance.
If used correctly, medical credit cards can help you get out, and stay out, of crippling medical debt. However, this depends on several different factors.
Medical Credit Card – How does it work?
Medical credit cards are not the same as conventional credit cards. Firstly, medical credit cards are accepted by healthcare service providers who participate in the particular card’s program.
Secondly, medical credit cards cannot be used to pay for all medical procedures, as there are several exceptions.
So, before you apply for a medical credit card you should ensure that the card is accepted by your healthcare services provider.
You should also make sure that the card will cover the expense of the medical treatment you need.
Apart from this, there are major differences between the features of different medical credit cards. Different companies offer different features.
These features will also depend on your credit score and financial history.
Pros and Cons of Medical Credit Cards
Let’s take a quick look at the pros and cons of the medical credit card so you can decide if it is worth buying:
Pros of Medical Credit Card
- Give quick access to credit if conventional means of credit are unable to cover the medical bill.
- Zero-interest financing option if you manage to pay off the balance before the end of the introductory period.
- Medical debt gets isolated to a specified amount which makes it easier to keep track of medical expenses and pay off the bills in a well-organized way.
Cons of Medical Credit Card
- If you fail to pay off the balance within the deferred-interest period, you may be charged interest retroactively for the deferral period. The late payment penalties for this could be very high and late payment may result in the introductory period ending early.
- At times, your conventional credit card could be a better option than a medical credit card. For instance, if your conventional credit card has an introductory 0% rate, an overall low-interest rate and greater versatility. In such situations, you may find conventional credit cards to be more convenient and affordable than medical credit cards.
Will Medical Credit Cards affect my credit score?
Medical debt is not listed under other types of debt on your credit report.
This is the case unless you are significantly past due on your medical debt payment which will transfer your account to a debt collector.
In short, if you owe a balance on your medical credit card it does not usually get reflected on your conventional credit card debt. This is true from the perspective of your credit score.
Besides, different medical credit cards affect your credit history in different ways. Some credit programs may accept all patients, irrespective of their credit score.
These are not reported to the credit bureaus. In such a case, the medical debt will not be listed in your normal credit report.
Other card providers may require a credit application and credit check, much like conventional credit cards. In such cases, your credit line gets included in your available revolving credit.
Any charge you incur on your medical credit card will go to your credit utilization ratio.
A medical credit card is an excellent alternative to pay off higher medical expenses. It is highly advisable to understand the rates, terms and how they will impact your credit score.
Take the time to decide whether a new medical credit card is in fact the best option for you before applying for one.