Are you considering a medical credit card? Perhaps you already have one. While it may sound like a good idea, the truth is it can be very easy to get overwhelmed with debt with a medical credit card. There can be some situations where you have no choice but to rely on a medical credit card to help with your medical costs, but before you sign up for one, be sure to read these warnings about getting a medical credit card:
1. It’s Still a Credit Card
Although it may be useful for medical issues – which can be a life or death situation – at the end of the day, it’s still a credit card. Credit cards tend to have extremely high interest rates, which if you fail to meet the repayments can come with a lot of penalties. Don’t fool yourself: just because it is for a medical situation does not change the fact it is a credit card and having a balance you cannot afford to pay can be really bad for your credit rating. If you need to put a substantial cost on your credit card, you may find it better to look at alternative ways to borrow the money you need.
2. Look Into the Interest Rates
What’s the rate of the medical credit card you have or are considering getting? Some medical credit cards have an interest rate of 26.99% which is much higher than standard credit cards. Some medical credit cards will offer introductory specials of interest-free periods of 6, 12, 18 or even 24 months. If you can repay the debt within this period, before interest kicks in, it can be a good alternative to a traditional loan or another credit card. However you do have to be really careful – most medical credit cards have a very low minimum repayment rate, meaning if you are making the minimum payment you will NOT pay back the credit card in time to avoid the interest fees when they kick in.
3. Is it Your Best Option?
If you can find a credit card with an interest-free period and you know that you can afford to repay the loan within that time, a medical credit card can be a good option for you. However, you should compare your medical credit card interest rate with that of a normal bank loan. You will find that usually, bank loans have a much lower rate, saving you money in the long run. Another option if you are lucky enough is to ask a family member for a loan. This obviously depends on the financial situation of your family members but it can be much better than getting into debt. A final option is if you are a homeowner you can even refinance a part of your house in order to cover the medical costs. While not ideal, with some good financial planning refinancing can be a fast and affordable way to get a loan for a medical emergency.
Be sure to really do the numbers to see if a medical credit card is right for you.