A credit card is a credit card, right? No, medical credit cards are specifically different from consumer credit cards. You’ve probably seen (or been offered) materials about medical credit cards at your doctor’s or dentist’s office. Unfortunately, these cards aren’t actually the best option if you rely on plastic cards to pay for medical expenses.
So let’s take a closer look at the differences between medical credit cards and rewards credit cards, and why it’s best to use plastic cards to pay for medical expenses only in very specific circumstances.
1. Possibility to earn rewards
Medical credit cards don’t offer any kind of rewards, let alone fixed rewards for different types of spending, and certainly you’d be hard-pressed to find a rewards card that includes medical as a bonus category.
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But our exclusive list of the best credit cards for medical expenses features a number of great fixed rewards cards that allow you to earn more than 1% (or 1 point per dollar) on medical expenses. While you can’t earn 3% or 5%, earning 1.5% or 2% can give you some serious points or cash back on larger bills at the doctor’s office or hospital.
2. 0% Annual Interest Rate vs. Late Payment Interest
One of the tricky things about certain types of credit cards (especially medical and store credit cards) is how they handle the introductory interest period. Many of the best rewards credit cards offer a 0% effective APR period, meaning there’s a period of several months, or even a year or more, where you can carry a balance without being charged interest (as long as you make at least the minimum payment each month). If you have a balance at the end of that period, interest will be charged on the balance.
But medical credit cards charge you late interest instead. There’s a period during which you don’t get charged interest (how long it lasts depends on the amount of the bill), but if you still have a balance after that period, you’re in trouble. Even if you only owe $100 of a $2,500 balance, you’re still charged interest on the full $2,500. Ouch.
3. Welcome Bonus
The best part about opening a new credit card is the chance to earn a welcome bonus. Depending on the amount of your medical expenses, you may be able to cover all of your bonus expenses on one bill. I’ve earned bonuses on multiple cards this way.
However, medical credit cards don’t come with a welcome bonus; their main perk is the ability to pay off large bills over time without interest (assuming you can pay the bill in full before the late interest period ends). For a chance to earn one of the best sign-up bonuses, you’ll need to turn to regular rewards cards.
Things to note when paying medical expenses with a credit card
This isn’t to say that you shouldn’t be shy about using a credit card to pay for medical expenses, it’s just not always the best option in every situation. Personally, I’ve been using my rewards credit card to pay for medical expenses lately (including some expensive dental surgery).
But since I had the option to either save money for the process up front (and use the card to pay, then pay it off right away and enjoy the points I’ve earned) or have a card with a good introductory APR, giving me more time to pay the fee, I’m comfortable doing so. If this doesn’t apply to your situation, it’s best not to pay for medical expenses with a regular credit card.
How do I pay for medical expenses?
It’s an unfortunate fact that medical costs in this country are exorbitantly high, and incurring credit card debt in the process of paying for it is not an ideal situation. There are almost always better options for dealing with medical debt. For example, personal loans usually have a lower APR than credit cards (and they also have fixed interest rates), making them a good way to cover high medical expenses.
Some medical institutions may offer low-interest or no-interest payment plans, so don’t hesitate to ask. Also, depending on your financial situation, you may be able to have some or all of your medical debt forgiven due to financial hardship.
It’s also a good idea to check whether your insurance company paid your claim on time. Medical billing errors are common, so don’t assume you have to pay exactly what you see on that dreaded bill.
Credit reporting rules have also recently changed so that small medical debts or previously paid medical debts being sent to collection agencies no longer have a devastating effect on your credit score.
If you have enough money to cover medical expenses, paying with a rewards credit card can be a surefire way to earn points or cash back (or hit the welcome bonus minimum spend). Make sure you can pay off your fees before the interest payments come due, and if not, consider your options for paying off your debt.
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