Medical Credit Cards Are a Bad Idea, Actually

It’s no secret that healthcare in the U.S. is difficult to afford, even for those who have insurance. In fact, roughly 20% of U.S. households have some amount of medical debt—and in 2021, more than half of all bills in collections were medical.

High out-of-pocket costs and unexpected bills may make medical financing options like credit cards and loans sound like the best option for paying for everything from hearing exams to elective dental procedures to emergency room visits. Your provider may even promote medical credit cards like CareCredit (which has 11.7 million cardholders) and medical loans offered by companies like AccessOne, Cherry, and PayZen.

However, while medical cards and loans may be convenient and come with attractive payment plans and promotional rates, you may end up with more debt, worse credit, and fewer financial aid options in the long term, which is why consumer finance experts strongly recommend against them.

How does medical financing work?

As the Consumer Financial Protection Bureau outlines, there are two common methods for financing healthcare:

Medical credit cards can be used to pay for services offered by your doctor or dentist—traditionally elective procedures or care not covered by insurance—though you may be able to charge hospital treatment or other bills. These cards often have zero interest for some promotional period (6–18 months), so you could avoid interest if you pay off the balance quickly.

With a medical loan, you pay your bill in installments, which are used to reimburse your provider. As with credit cards, there’s generally deferred interest that jumps significantly after a period of time.

The CFPB notes that medical providers have multiple incentives to offer (or even push) financing options, all of which come down to getting paid more, sooner. For example, medical financing might influence patients to opt for treatment that they would otherwise price shop for, or delay. Providers using these options also get paid in full more quickly and have fewer billing and debt collection hassles.

Why medical financing is bad for consumers

Medical credit cards and loans are risky for a number of reasons. First and foremost, interest rates are even higher than with a conventional credit card—averaging 27% compared to 16%. If you don’t pay off your balance during the promotional period, you may accrue a lot of debt very quickly. In some cases, unexpected fees could also trigger interest on balances already paid off.

If you’re pressured into a medical credit card or loan, you may miss insurance benefits you’re actually eligible for or end up paying for expensive care you don’t need.

You may also have more affordable options than medical financing. For example, some hospitals and providers offer income-based financial assistance (including discounted or free care), or at the very least, low-interest or interest-free payment plans. You may also be able to negotiate your balance directly with the hospital or clinic.

With these options, you have more consumer protections if your bill goes unpaid. Medical credit card debt is treated just like any other credit card delinquency on your credit report.

How to avoid medical financing

You should always check your insurance benefits before undergoing treatment. (If your insurer denies coverage for non-elective treatment, you can file an appeal.) You should also evaluate whether tests or procedures are necessary, especially if they feel unaffordable, and don’t hesitate to get a second opinion.

Next, avoid charging anything to a credit card, medical or otherwise. Experts suggest asking about financial assistance, alternative payment plans offered directly through providers, or charitable programs as outlined above. Even a personal loan is recommended over a credit card.