You've Been Warned: This Type Of Credit Card Could Make You Bleed Money

Credit cards have come a long way since they were first introduced in the 1950s. Today, they offer consumers convenience with cash back rewards and the ability to pay for necessities when money is running tight. There are even some items that individuals should always pay for with a credit card for the added perks and protections. But as credit cards have evolved and expanded, there are new products that may not benefit everyone. One such product to be wary of is medical credit cards. These products can help pay for treatment in a pinch, but can ultimately worsen medical debt in the long run.

Medical credit cards are a type of credit card, often offered in health providers' offices, that can help individuals pay for expensive treatments by breaking up the cost into monthly installments. Although they offer convenience, they also come with risks. To start, they have a higher average interest rate than the average traditional credit card. According to the Consumer Financial Protection Bureau (CFPB), the interest rate for medical payment products is often north of 25%. While these products may offer a 0% interest promotional phase, if the full amount is not paid by the end of it, individuals often have to pay back interest for the entire promotional period. Additionally, these cards may come with fine print stipulations, such as late payment fees. But worst of all, according to the CFPB, is that medical credit cards may incentivize healthcare providers to prescribe more expensive treatments than would otherwise be needed.

Medical care is very often a costly necessity. It can be tempting to open a medical credit card to pay for treatment, but there are several other options worth trying beforehand. A good place to start is by looking at personal savings or dedicated medical savings accounts, such as flexible spending accounts (FSA) or health savings accounts (HSA). By setting up these accounts ahead of time, you will already have funds to cover the cost of treatment thanks to past contributions. If you have the funds, you can also save money by paying your doctor directly in cash; just be sure to reimburse yourself from your FSA or HSA if you go this route.

If you absolutely have to rely on debt, check if your provider offers an in-house payment plan. These typically split the cost of treatment into monthly installments and are particularly good for smaller medical expenses. In-house plans may also have more favorable terms for patients than medical credit cards. In some cases of financial hardship, medical providers and hospital networks may also provide assistance programs, especially in cases of essential or urgent care. 

Finally, if you have exhausted all options but still want to avoid medical credit cards, using a standard credit card is an option. This is beneficial if the interest rate on your card is lower than that of a medical credit card and if you have a plan to pay it off. However, this option should be a last resort, as medical bills are one of the few things you should never pay with a credit card.