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When you are sick, you want the peace of mind that comes with knowing that you can afford your payments. This is not the time to be worrying about your finances because you need to concentrate on getting better. Sometimes, the stress is what aggravates the whole situation. So you want to make sure that this is a problem that you will not worry about when you get sick.
This is probably why people opt to get medical credit cards. This is a limited-purpose credit card that you can use on health related costs. Usually, people use this for expenses that are beyond the Medicaid/Medicare coverage - or other private health insurances.
The problem with health care credit cards
While the main intention is a good one, this type of credit card poses a lot of issues. We came across an article from Kiplinger.com and they mentioned a couple of problems with medical credit cards. They said that using these will not really help you with your health - it could even make it worse. Here are the important facts that are mentioned about these credit cards.
It is the health care providers who offer the option to patients. They give the option of paying for the treatment with medical credit cards. Although they do the talking, these cards are owned by financial institutions like Wells Fargo, Citigroup, etc.
The cards are usually for expenses that are not covered by government or private health care insurances like dental, audiology, vision and other similar treatments. It can also cover vet-related expenses.
The medical credit cards are offered with deferred interest - this means the consumers will not pay interest as long as the full amount is paid back in 6 months. Depending on the card, this can reach up to 2 years.
These facts shows a lot of issues that we should have with these medical credit cards.
Since cards are offered through the health care provider’s office, the consumers availing it are not scrutinized for their ability to pay.
Since the interest is deferred consumers are more tempted to use it more without considering how much they will end up paying on the service.
There is a possibility that consumers will skip negotiating with health care providers.
Offering the card to patients is a tricky way to encourage credit card use. Since they are vulnerable, they will be more inclined to accept the card without really thinking about the repercussions of using it.
It is a financial trap that will only benefit the health care providers because they will be paid by the credit card company immediately. It will not help consumes but instead, it will endanger them by putting them through so much debt.
It shields the rising cost of health care services and the interest rate from the cards will heighten that further.
Although the interest rate on the charges will only take effect after a certain period, it will be imposed on the original amount - and not the current balance. So let us assume that the patient has a $1,000 bill and they have been paying without interest for the last 6 months. When the interest rate kicks in, they will still be charged on the original amount owed - $1,000.
Those offering the credit cards do not explain all of these and they are not held accountable if the patients misunderstand the details of the card. This is not yet covered by any law that protects medical credit card users.
What is sad for this scenario is the fact that those who are using it are usually the elderly or low income families who have no cash or health insurance to help with medical expenses. This is definitely an issue that the government has to address to head off any lasting problem in the future.
Is it wise to rely on cards for medical expenses?
In the end, we are confronted with the question about using credit cards for emergency situations. What are the emergency fund best practices that you should follow? Does it include the use of medical credit cards?
In all honestly, it is unlikely that this will be one of the practices that you should follow. Using credit cards for emergency situations means you are more likely to make the wrong financial decisions. You will be in a vulnerable state and that makes you in an irrational state of mind.
The best option for you is to build up your cash emergency fund. That way, when you need the money for your medical expenses, you don’t have to worry about it. When you pay with credit cards, you still have to think about where you will get the money to pay for that. After all, you paid with the creditor’s money - not your own.
If you build up your cash reserves and you get in an emergency, you can pay with cash. We all know that it is more psychologically restricting to pay in cash and that makes us more hesitant to spend. It will encourage us to negotiate with health care providers for a lower rate on the services they will give us.
If you like the additional security, that is when you should use medical credit cards. But you should never use it as your primary source of funds.
In case you have acquired so many debts already, here is a video that will tell you where to find credit card debt help.