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Do you want or need a costly medical procedure that is out of your current price range? If so, your medical provider may offer you a medical credit card. This is a credit card that is used exclusively for medical purposes – similar to how some gas cards operate for drivers.
However, even though you may be feeling the pain at the pump, a medical credit card is significantly more risky than a gas card, as thousands of dollars are often involved.
It is very important to know what you are getting into if and when you decide to accept such a card.
Let’s face it – the cost of healthcare is astronomical and getting worse. The healthcare market in the US is highly inefficient. Medical insurance companies have been cutting back on coverage and/or raising premiums for many Americans.
Providers charge prices that would be outrageous in a truly free market.
This all adds up to a mess for the consumer and can lead to extremely high bills for medical services. Something has to give – leading consumers to consider options such as medical credit cards.
The Risks of Medical Credit Cards
Medical credit cards are generally as good as the provider that offers them.
If your provider goes out of business or has unscrupulous business ethics, you could get into serious financial trouble.
Take the case of Diane Lafata. Diane financed her $5,500 dentures on a medical credit card that was offered with a 0 percent introductory rate. She figured that she could pay it off. After receiving poor service and being billed for it, her dentist abruptly closed.
Now she is left to pay off the bill with no teeth to show for it – at a 22 percent interest rate – and she‘ll have to get her dental work done properly somewhere else and pay again, as her provider is out of business.
Her case may not represent the typical experience, but, as with any other credit card, the consumer must still spend money wisely as if he or she was using cash.
What to Look Out For
Here are some other risks to watch out for:
- Retroactive interest rates: A low introductory rate may skyrocket if you make a late payment. It may even be applied retroactively, adding insult to injury.
- Shortened payment cycles: Some consumers have had to pay higher interest rates due to late payments. Their payment cycled were shortened without notice, making their bills due earlier.
- Being targeted when you are vulnerable: Some medical credit cards are marketed to individuals when they are most in need. Someone who needs a medical procedure that is unaffordable may be targeted to sign up for a medical credit card.
What You Can Do
The easiest solution to this problem is to simply avoid using medical credit cards.
The risks generally outweigh the benefits. However, if you find yourself genuinely interested in a medical credit card, take the following precautions:
- Request an estimate of the cost of the procedure. Make sure you know how much the insurance company will pay and how much you must pay out of pocket.
- Request alternate payment options. A payment plan may be available that eliminates the need for a medical credit card.
- Avoid paying for treatments upfront. Always wait until after you have been treated and let the medical provider handle the insurance paperwork. Only pay the amount that your insurer does not cover, as it may be difficult to receive reimbursement if you pay too much.
- Do not rush your decision to accept or reject a medical credit card. Read the terms and conditions and make sure you understand them. Avoid using the card unless you feel it is worthwhile.