If you're looking for a loan to help pay for an elective surgery or emergency root canal, you won't have trouble finding one. Applications for medical credit cards, which are designed to pay exclusively for out-of-pocket health care costs, are common at specialty health care and veterinarian offices.
But be careful, say consumer advocates. Many health-care credit cards remain fraught with risks, thanks, in part, to high interest rates that can make the costs of a procedure balloon. (To compare the terms on medical credit cards and loans, see CreditCards.com's.)
Here are a few expert tips for helping make sure you choose the best loan option for health-care financing.
Shop around. Many health-care providers — especially those who serve patients with limited health insurance coverage, such as dentists — partner exclusively with third-party creditors, such as Care Credit or Citibank, on special financing deals for patients.
The cards help doctors' offices get repaid quickly for services while offering patients a way to finance procedures they may not otherwise be able to pay for all at once.
However, don't be fooled by the fact that your doctor's office is recommending it, say experts. Just because your health-care provider is offering a particular card doesn't mean that it's the best deal out there.
Read the terms. Most medical credit cards offer long-term, interest-deferred financing deals that can make signing up for the card seem like a no-brainer.
You may be able to get, for example, an interest-deferred loan on a pricey medical procedure that gives you anywhere between six and 24 months to pay it off.
But there's a catch. With a deferred-interest credit card, if you don't repay a card's balance in full by the time the promotional period expires, you may be charged the card's standard interest rate on the entire amount charged to the card — retroactive to the date of the first purchase.
Do the math. After you've scanned the terms and conditions that are included with the application, use a loan payoff calculator to see how much you'll have to pay each month to retire the debt before the interest-free promotional period expires. You may find that the monthly payment that is needed to wipe out the balance before interest kicks in is far more than you can afford to pay.
Health-care credit cards work best if you can afford the monthly payment during the deferred-interest period and if you are financially stable and can work within a budget, she says.