Whether you need to pay for dental work or several chiropractic visits, it’s important to read the fine print when considering Care Credit.
Life is often full of surprises, one of them being medical issues. Shoveling the driveway may lead to six weeks of chiropractic therapy, and eating that tempting caramel apple might land you in your dentist’s chair with the added bonus of a high dental bill to repair a cracked tooth.
While there are certain scenarios where you have the cash on hand, most people don’t have several hundred (or even thousands of) dollars to pay for an unexpected medical bill.
So what should you do? If it’s possible, try to set up a payment arrangement with your Louisville doctor’s or dentist’s office. If they agree to create a contract for a fixed monthly payment with no interest, that’s the way to go.
If they tell you that they can’t do that, your next option is to dip into your savings or emergency fund.
If you don’t have enough cash in there, the third option is to charge the amount due onto a credit card. That being said, it’s important to note that you should judiciously open credit cards, as opening too many has quite a few downsides.
However, if you’re in a situation where the balance on your invoice is truly something that you can’t afford, opening a credit card with a 0% introductory APR can be a good option instead of using a card that you already have (since it would come with a high APR).
You may have been considering Care Credit, as they’re known for offering 0% interest rates upfront, which sounds perfect since it’s advertised as a “medical credit card.” That should be the perfect card for your medical bills, right? Not exactly.
There’s a huge catch: If you don’t pay the balance off in full after the introductory period is over, you’ll be charged in arrears for deferred interest on the entire initial balance.
Even though ‘Care Credit’ is a medical credit card, it’s actually one of the worst options when paying for medical expenses.
What does this mean?
It means that if you charged $4,500 on your Care Credit card, and didn’t pay off that balance in full after a 12-month, 0% interest introductory period, you wouldn’t just be charged interest on the remaining balance after 12 months — you would be charged interest on the entire initial balance.
The standard APR for Care Credit is 26.99% after the introductory period ends, so if you paid $2,500 by the end of that period, you wouldn’t be charged interested on the remaining $2,000 balance — you would instead be charged interest on the entire $4,500 bill!
That means that you would not only have to pay the remaining $2,000 balance, but also a yearly interest amount of approximately $1,215.00 on top of that. Many people end up having to file for bankruptcy when they fall into multiple traps like this.
That’s why it’s always important to read the fine print, and ask specific questions about the terms on any card or loan before applying.
In order to avoid the possibility of paying deferred interest, you should opt for applying for a regular credit card instead of Care Credit.
You could get points, cash back, and travel rewards, and for most major credit cards (such as Mastercard, Visa, and Discover), you don’t pay deferred interest. That being said, there are a few important things to consider before applying for a new card.
First, is your credit good enough to guarantee an approval? Be sure to check your credit scores, and your credit report. If you’ve had missed or late payments, and already have high balances on other cards, you most likely won’t get approved for a new line of credit.
Second, will you be able to pay off the entire bill within the introductory period? Let’s say you have a dental bill that’s $2,200.
If you get approved for a 0% introductory APR for 15 months, you’ll need to pay at least $150 a month, but ideally $175 to $200 a month to get it paid off in plenty of time before the introductory period ends.
If you can only afford $100 a month, then you have to consider the next question.
Third, what’s the APR after the introductory rate ends? If you only pay $100 for 15 months, you’ll still have a balance of $700 once the introductory rate expires. If the APR after that is 19.99%, you would be paying an additional $82 in total interest if you continued to pay $100 a month over the following seven months.
While that’s not really enough to break the bank, it’s important to calculate how much interest you’d be paying to avoid any major surprises.
Finally, will you be able to avoid the temptation to use the rest of your credit line for other non-necessary items?
For example, if your new credit card offered you a credit limit of $6,000, and you charged $2,200 for your dental bill, would you be tempted to use the remaining $3,800 credit line for that big-screen TV and sectional couch you’ve always wanted?
While it sounds good at first, there are major consequences for that.
Your credit score will drop significantly if you’re utilizing your entire credit line (i.e. maxing out your card), and will drop even further if you can’t afford to make your monthly payments.
In addition, you’ll most likely end up going well past your introductory period, and end up paying thousands of dollars in interest.
As you can see, credit card rates, terms, and fees can vary greatly, and the fine print can have some major red flags. Unless you know for an absolute fact that you’ll be able to pay off your balance before the introductory period is up, it’s best to avoid Care Credit altogether.
Chase, Bank of America, and Discover, all have cards that offer a 0% APR for the first 12 to 15 months, and it’s good to compare all of the pros and cons before applying.
If you’re looking for great reviews, Nerd Wallet has great financial blogs that provide advice on which credit cards can best suit your needs.
If you already have a large balance on a Care Credit medical card, along with other debts, you may feel overwhelmed. Furthermore, if you’ve been unable to make payments on those debts, and you have creditors calling you, let’s talk about your options.
After discussing your current financial situation, I can help you obtain legal protection through a bankruptcy plan if it’s in your best interest.
Despite the myths, bankruptcy can be a positive step in the right direction for you and your family because it can legally protect your car, your home, and your paycheck from being taken by your creditors.
If you want to set up a free case evaluation, you can fill out the form below, or text or call me directly on my cell phone at (502) 435-2593. I’m ready to help you figure out a plan that gives you financial freedom!
All the best,
Tracy L. Hirsch
Kentucky Bankruptcy Attorney
Need help immediately? Text or call Tracy’s cell phone to speak with her directly!
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