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Managing Health Care Debt: The Ultimate Guide to Avoiding Credit Hits with Medical Credit Cards

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Managing Health Care Debt Without a Hit to Your Credit

Many Utahns are struggling to afford the rising costs of health care, even with health insurance. According to a nationwide survey from KFF Health News, 100 million Americans have medical debt, and one in 4 say they have put off medical care because of costs. To help manage these costs, many people are turning to medical credit cards. However, credit experts warn that they can leave some people worse off.

Medical credit cards are being promoted as a convenient tool to pay for expenses not covered by insurance. But they come with serious drawbacks, such as deferred interest if the full balance is not paid off at the end of a promotional period. Even if 99% of the balance is paid off, the cardholder will still be hit with the full interest rate, applied retroactively to the original purchase amount.

According to LendingTree’s chief credit analyst, Matt Schulz, “It’s a really big deal. 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.”

Additionally, the average interest rate on medical credit cards is a whopping 27%, compared to the 16% rate of a typical credit card. The Consumer Financial Protection Bureau has also found instances of health care providers pushing medical credit cardholders to undergo more expensive or unnecessary procedures, potentially leading to upselling.

Furthermore, health care debt usually does not affect your credit unless it goes to collections. However, this protection is lost when using 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,” explained Schulz. Given how much medical debt has been purged from credit reports over the last few years, it’s important to understand that nuance.

Instead of opting for a medical credit card, better options for managing health care debt include obtaining a personal loan from your bank and negotiating with your medical provider. Many health care providers are willing to work with patients on zero- or low-interest payment plans. Schulz also advises patients to request an itemized medical bill with Current Procedural Terminology codes to ensure accurate billing and to facilitate cost negotiations.

It’s crucial to explore alternative avenues for managing health care debt to avoid unnecessary financial strain and potential credit issues.

Author: Matt Gephardt


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