These cards (and sometimes installment loans) issued expressly to cover health care costs aren’t new, but their use is growing. From 2018 to 2020, people used medical credit cards or loans to pay for nearly $23 billion in health care expenses, according to a May report by the Consumer Financial Protection Bureau (CFPB), a federal agency. CareCredit, a major medical credit card issuer, has more than 11.7 million cardholders, up from 4.4 million a decade ago.

Despite their popularity, medical credit cards aren’t necessarily the best tool for handling medical bills. The cards can leave you on the hook for more than you expect, and other payment options may offer better terms.

“It’s in large part buyer beware,” says John McNamara, assistant director of consumer credit, payments and deposits markets at the CFPB.

Medical credit cards are typically offered by financial institutions to pay for health services that people may not have insurance coverage for, such as dental, vision and hearing care. Major players include CareCredit, part of Synchrony Financial; Wells Fargo Health Advantage; and Alphaeon Credit. Increasingly, these cards are also marketed for regular medical services to help people fill financial gaps in their insurance plans resulting from high deductibles and other out-of-pocket costs.

Although you may sign up for the cards at the doctor’s office, your doctor isn’t the one who’s lending you the money. Instead, the lender is a financial institution that has an agreement with your health care provider to do the credit approval, issue the card or loan and take over managing your account.

Health care providers like the cards because they’ll get paid for their services quickly, reducing their paperwork and financial risk. Here’s how one consulting firm explains the benefit to medical professionals: “We know if we go to outside financing, there’s going to be a fee. But we know collecting money over several months ourselves is much harder.” By signing up more patients, providers may also get a break on the fees that these financial firms charge them, according to the CFPB.

Unfortunately, medical credit cards have pitfalls that may make them better deals for your health care provider than for you. One key issue is how interest, which can easily exceed 25 percent, is charged. Medical credit cards often promise zero interest for a certain period of time after you’ve used them to borrow. If you can pay off the total amount within that time—say, six months or a year—the cards can be a good deal. But if you can’t, it’s a different story. If you still have a balance after that introductory period ends, you may owe interest on the full original balance. Imagine you have one year to pay a $2,000 dental bill at zero percent interest. At year’s end, if you’ve repaid all but $100 of that amount, you could owe 25 percent interest on the original bill, or $500.

“It takes advantage of consumer optimism,” says Chi Chi Wu, a senior attorney at the National Consumer Law Center who specializes in consumer credit. “People think, I’ll pay it off in a year, but often they don’t, because life happens.”

The CFPB report found that people paid $1 billion in deferred interest from 2018 to 2020, typically paying interest rates of 27 percent. In comparison, interest rates on conventional credit cards averaged 16 percent.

Medical credit cards can be problematic in other ways, according to the CFPB and the U.S. PIRG Education Fund. Their easy availability might prevent you from seeking out smarter options; for example, you might qualify for financing programs that are significantly cheaper. And once you put the balance on a credit card, your provider has little incentive to correct inaccurate charges or see whether you qualify for financial assistance.

Finally, you may lose out on favorable treatment of medical debt by the major consumer credit reporting agencies. In 2022, Equifax, Experian and TransUnion agreed not to put unpaid medical collection debt onto a consumer’s credit report for a full year, giving patients time to work with doctors and insurers to resolve problems. In addition, medical collection debts under $500 and medical debt that has been paid off no longer appear on credit reports.

But medical credit card debt may not get those protections. Lenders who aren’t health care providers report your payment history and balances to the credit bureaus “like any other credit card or installment loan,” says a spokesperson for the Consumer Data Industry Association, a credit bureau trade group. Spokespeople for Wells Fargo and Synchrony confirm that their lending doesn’t count as medical debt. “CareCredit is a credit card,” Synchrony explains. “When a consumer pays for a product or service with a credit card, any resulting debt is credit card debt—not utility debt, restaurant debt, streaming service debt or medical debt.” (That’s also true for the AARP Essential Rewards Mastercard from Barclays, which offers 2 percent cash back on eligible medical expenses, but which, unlike medical credit cards, can be used for general-purpose spending and isn’t marketed through health care providers.)

If you’re already stressed about the health problems that brought you to the doctor’s office, you may not be in the best position to assess your financial options on the spot. Yet that’s where medical credit cards are marketed. “It’s not only ‘You owe this, put it on your card,’ but ‘I have the card for you,’ ” says Andrew Cohen, director and lead attorney of the Access to Care and Coverage Practice at the Boston-based law firm Health Law Advocates. The CFPB’s McNamara says, “Consumers assume that the health care provider will have their best interests at heart.” That may be the case for medical care, but not necessarily their financial care, he adds.