The Biden administration recently published a report warning consumers against using medical credit cards and other specialty financial products for medical services. Medical financing plans, like medical credit cards, may be appealing as a short-term solution to high medical costs. But high interest rates can cause patients to overpay for medical services and contribute to medical debt. Additionally, many consumers don’t understand the terms of their medical credit cards, causing them to incur unexpected fees.

Despite the risks, Americans are increasingly turning to medical credit cards to combat rising health care costs. A poll by KFF Health found that 1 in 5 adults in the United States have a financing plan to help pay for medical or dental care. This article explains what you need to know about medical credit cards.

What Are Medical Credit Cards?

Medical credit cards can be used to pay for various medical services. They can cover costs associated with medical care for you, your family and even your pets. These cards are typically used to help pay large out-of-pocket medical bills or medical services that insurance doesn’t cover, such as cosmetic or elective procedures.

How Do Medical Credit Cards Work?

You may see advertisements for medical credit cards in your doctor’s office, at a hospital or at another health care service facility. If you choose to apply, your doctor or another medical care staff member will typically sign you up. Once your application is approved, your medical credit card company will pay your doctor for services. You are then responsible for paying back your credit card company.

Like other types of credit cards, medical credit cards often have zero interest during the introductory period, which begins when your account is created. After the introductory period, interest rates can exceed 25%, according to a recent report by the Consumer Financial Protection Bureau (CFPB). These rate hikes can make it challenging to pay off bills and may result in inflated costs for medical services.

What You Need to Know

Consumers who fail to pay off their medical credit card bills before the end of their introductory period may experience significant rate hikes and fees, which can cause financial hardship and result in medical debt. Here’s information you should know about medical credit card use:

  • The CFPB found that $1 billion in deferred interest on medical credit cards and other medical financing plans was paid from 2018 to 2020.
  • Kaiser Family Foundation (KFF) Health News reported that 100 million Americans have medical debt.
  • Interest rates for medical credit cards can be higher than interest rates for other types of financing, such as general credit cards, according to the CFPB.
  • Borrowers who incur interest on medical credit cards pay an additional 23% of their original purchase, the CFPB report found.
  • The risk of incurring medical credit card debt is greater among low-income borrowers and people with poor credit.
  • Medical credit cards may have different payment schedules and fees than other types of credit cards.
  • The use of a medical credit card may make receiving other types of financial assistance more difficult.
  • Your medical credit card payments impact your credit score.

Deferred interest payment plans may benefit patients who can pay off their bills before the end of their introductory period. However, patients must understand their options and the implications of them before signing up for a medical credit card or another medical financing option.


Receiving a costly health care bill can be a highly stressful or emotional experience. Do your research ahead of time so that you’re prepared to make an educated financial decision on medical credit card use when the time comes.

Posted in: Benefits.
Last Modified: August 2, 2023