Medical credit cards? Ways to manage health care debt without a hit to your credit

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SALT LAKE CITY — Many Utahns struggle to afford the rising costs of health care, even those with health insurance. A nationwide survey from KFF Health News found 100 million Americans have medical debt. One in 4 say they have put off medical care because of costs. Now, to help manage those costs, many people are turning to medical credit cards. But credit experts warn they can leave some people worse off.

Medical credit cards are being touted as a convenient tool to pay for stuff not covered by insurance. But they come with serious gotchas. A big one is deferred interest if you can’t pay off the full balance at the end of a promotional period. Even if you paid off 99%, you are still going to get hit with the full interest rate, applied retroactively to the original purchase amount.

“It’s a really big deal,” said LendingTree’s chief credit analyst, Matt Schulz. “It can be a really unpleasant surprise, especially considering how expensive medical procedures can be. You can be talking about an awful lot of money.”

And those interest rates run high with a whopping average of 27%, according to the Consumer Financial Protection Bureau. Compare that to the 16% rate of a typical credit card.

The Consumer Financial Protection Bureau also finds some health care providers pushing medical credit cardholders to get more expensive or extra procedures they might not need.

“There’s certainly the possibility of upsell happening when you use these medical credit cards, because the provider may know that they’re going to end up getting paid,” said Schulz.

And health care debt usually does not hit your credit unless it goes to collections. That protection is swiped away when you use a medical credit card.

“When you put that medical procedure on a medical credit card or any other type of credit card, it’s no longer seen as medical debt for credit report purposes,” Schulz explained. “Given how much medical debt has been purged from credit reports over the last few years, it’s important to understand that nuance.”

Better options than a medical credit card include getting a personal loan from your bank and negotiating with your medical provider. Many health care providers will work with you on zero- or low-interest payment plans.

Schulz adds patients can really benefit by requesting an itemized medical bill with Current Procedural Terminology codes that describe exactly what the procedure is that you’re being billed for.

“That can help you not only negotiate those costs but make sure that you are actually getting charged for what you actually had done,” he said.

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