In Illinois, Democratic senators have raised concerns about medical credit cards and their impact on patients’ financial well-being. It is essential for individuals to understand the risks involved with using these cards and consider other options to cover their healthcare costs.
Interest rate confusion
Medical credit cards often come with misleading interest rate terms that make them look appealing to consumers who cannot afford to pay their medical bills upfront. However, the card’s promotional deal typically only defers the interest until later, which differs from a credit card with zero-percent interest for a certain period.
Once the promotional period ends, individuals who cannot pay off their balance within 12 months get charged for 12 months of deferred interest. They also typically pay a higher interest rate on the debt than they would for a general-use credit card.
It is crucial that individuals fully understand the card’s terms and conditions to avoid an unexpected financial burden in the future.
Overpaying for medical care
Using a medical credit card may cause individuals to pay more than they need to for medical care. By relying on the cards for convenience, patients could overlook financial alternatives such as need-based assistance and other programs offered by hospitals and other healthcare organizations.
For example, non-profit hospitals must offer discounts to poor patients in exchange for their tax-exempt status, but patients might pay their bills on credit without even knowing they’re entitled to a discount.
Causing confusion with insurance
Medical credit cards originally covered elective procedures not covered by insurance. However, larger doctor’s offices and some hospitals now accept the cards to cover the out-of-pocket portion of a patient’s expenses covered under their insurance.
However, patients who pay their expenses with the card before receiving their final bill may have discrepancies. The card can get charged for unexpected costs such as late fees, additional charges and interest due to medical billing errors, causing a large debt burden and severe credit issues. Some medical expenses may also be covered by insurance, and needlessly paying those with a medical credit card can cause additional billing, overpayment and other issues.
Understanding the potential drawbacks of using medical credit cards is essential for your financial well-being. By staying aware and exploring all your options, you can confidently navigate and minimize the financial burden of medical expenses.