What is Medical Credit And How Does It Work?

Written By Mary Beth Eastman
Last updated June 19, 2019

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June 19, 2018

Simple. Thrifty. Living.

Life has a way of throwing us unexpected curveballs. Sometimes those surprises include emergency auto repairs, a leaky roof, a broken water pipe, or even medical issues. While in a perfect world, you would always have ample savings to address all such curveballs, that simply isn’t possible all of the time.

In the case of medical issues, those surprises can even be life-threatening and, thus, might make it necessary to use other forms of payment. Under these circumstances, medical credit could very well be a literal lifesaver.

From small medical practices and dentists to specialists and hospitals, most medical providers will contract with a lender to provide medical-specific loans to patients when they can’t afford the out-of-pocket expense. When a patient uses medical credit, they are entering into a financial obligation with the lender and not the medical providers themselves.

When buying an item from a store, if you use a credit card to make payment, the credit card company pays the store for the purchased items and you, consequently, pay the credit card company back plus interest. You make payments on the debt until it is paid off. Medical credit works in an almost identical fashion.

Although medical credit has certain similarities to other forms of credit, it also has some crucial differences. First and foremost, upon approval, the credit line can only be used with the specific medical provider contracted with the lender. You cannot use medical credit to buy groceries, healthcare supplies, or even pay for the premiums on your health insurance, but only on the direct medical expenses incurred through the health practitioner.

When using medical credit, be sure to use the same better judgment you use with other forms of credit. While it can indeed be convenient and comfortable on your cash flow, ultimately, you’ll end up paying more in the long run by using medical credit due to accrued interest. Therefore, although many elective procedures like plastic surgery or aestheticians provide access to medical credit, make sure that the credit pros outweigh the cons when choosing to go forward.

Also, always check the interest rates to make certain you’re not paying exorbitantly while the credit line is open. Just as you would seek out the best credit cards, carefully comparing interest rates, you should do the same for your medical credit. Granted, a serious health concern might not leave you with many viable options other than medical credit. However, there are some alternatives to medical credit worth checking out, including personal loans with a reputable lender. Check out our reviews of the best online loan sites for details.

Whenever possible, use common sense and avoid high-interest rate medical credit unless there is no better solution.

About the Author

Mary Beth Eastman

Mary Beth Eastman serves as the content manager for Simple. Thrifty. Living, where she is dedicated to helping readers use money and credit wisely. Mary Beth believes that access to the right financial information paired with a growth mindset are essential tools for getting out of debt and building wealth. Mary Beth has a degree in Journalism from Bowling Green State University and has focused her 20-year journalism career on putting readers front and center, carefully considering their concerns and presenting information that will help them in their everyday lives. She has won numerous statewide journalism awards. Her writing on personal finance as been featured on numerous websites in addition to Simple. Thrifty. Living, including Huffington Post and Lexington Law blog. Mary Beth resides in Pittsburgh, Pa., with her family and two rescue dogs.

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