Health Care on Credit

Faced with health costs that may not be covered by insurance, many people are choosing to pay for health care with credit cards. One new type of credit card is especially designed for medical expenses. Here's what you should know.

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MADELEINE BRAND, host:

From NPR News, it's DAY TO DAY.

Americans pay the most for medical care in the world and many of us are now paying with credit. A whole new type of credit card is now available just for health care expenses. But is that a good idea?

Joining us is Michelle Singletary. She writes the syndicated column "The Color of Money." She's also DAY TO DAY's regular guest on matters of personal finance. Hi, Michelle.

MICHELLE SINGLETARY: Hi.

BRAND: Well, there was a recent survey out that found that people who use credit cards to pay medical bills have greater credit card debt than those who don't. Why is that?

SINGLETARY: Well, first of all, because medical expenses are so high. So when they do charge, they're charging more than the average person who's just going to a retail store. It really comes down to who has insurance. Those who don't have insurance are more likely to use credit because obviously they want medical care.

CHADWICK: Well, what are these special health care credit cards, Michelle, and how do they work?

SINGLETARY: Well, you know, many health care providers realized that there are lot of folks who don't have insurance. So they created these credit cards that you can only charge for medical expenses. Like the expenses you have when you go to the doctors or when you have to go the hospital for, say, an elective surgery, and you charge just like you would anything else for the expenses that you're going to incur for your medical care.

BRAND: Do they have the same interest rates?

SINGLETARY: They're much higher than the average credit card rate right now, as much as 20, 29, maybe even 30 percent, so quite high.

CHADWICK: So why would - I mean these are very - if the interest rates are so much higher, why not just use a regular card? Why would you use this card rather than a regular credit card?

SINGLETARY: That's a good question. Oftentimes they may not qualify for a regular credit card. Because these are specialized cards and they're going to their medical provider, they may qualify more quickly than they would for a regular card. But that's a good point that the interest rates are so high. And remember this. This is a key point. Oftentimes when you have a bill with a hospital or doctor, there's no interest rate charged with it if you were - got a payment plan as opposed to these cards which have these high interest rates.

BRAND: So Michelle, just to be clear. These are for medical expenses that are not emergencies. Because if you don't have insurance and you have an emergency, you can still get treated by walking into an emergency room.

SINGLETARY: That's correct, that's correct. Say you're going to the dentist to get some dental work or elective surgery. In this country, if you need emergency treatment, the hospitals have to treat you.

BRAND: Okay, is there any plus side to using this kind of credit card?

SINGLETARY: The interest rates are so high and many consumer advocates say that when this is available people don't look for other resources, say, look for state or federal aid to pay the medical bill. But I guess the high side would be that if you need medical help, and you don't have the money, and you feel like you absolutely need it, it is a way to pay for the care. But it's a very expensive way.

BRAND: Michelle Singletary writes the financial advice column "The Color of Money." She's our regular guest on matters of personal finance. Thanks, Michele.

SINGLETARY: You're welcome.

CHADWICK: And if you need Michelle's money advice, you can write us. To send letters, go to our Web site, npr.org. Click on the Contact Us link. You'll find it on the top of every page. Be sure to include Michelle in the subject box.

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