CareCredit Disadvantages
There are a few cons to using CareCredit, including:
- Higher interest rates after zero-interest promotional offer. After the zero-interest promotional period, the CareCredit interest rate zooms to Prime +18.99.As of early March 2024, the interest rate on CareCredit debt under this repayment plan was as high as 29.99%. That’s on the expensive side – especially when you consider the average interest rate on other no-annual fee credit cards is just 24%, according to research by Lending Tree.Furthermore, under the current credit agreement, in no circumstances will the interest rate on the card drop below 22.98%.
- Late payment fees. Care Credit charges a late payment fee, The fee depends on your balance: it’s $29 if your balance is $249.99 or less, and $39 on a balance balance of $250.00 or more. Those are the highest late fees the law allows. That means you could potentially pay a late fee of even more than your entire balance. This is a very bad deal if you have other options.
- Limited use. Unlike most other “credit card” products, you can’t use CareCredit wherever Visa and MasterCard are accepted”. You can only use CareCredit with doctors and other medical providers who have contracted with the card.Cash advances are available, but for a fee of 4% of the amount advanced, with a $5 minimum.
Tip. Many providers will offer you a discount if you pay with cash up front rather than financing. If you can raise the money from any other source, ask for this cash discount.
If you are enrolled in a health sharing plan, it’s a good idea to have their concierge desk or bill negotiation service negotiate for you – ideally before you receive care, if possible.
This way, you preserve your “walk-away” power.
Credit Check
When you apply, CareCredit does run a credit check. But it’s a “soft-pull” that has no impact on your credit score.
- Health share concierge desk. Care Credit offers a health share concierge desk that can help you negotiate lower prices with healthcare providers. This can be a helpful resource if you’re trying to save money on your healthcare costs.
| Feature | Pros | Cons |
|---|---|---|
| Interest-free financing | Allows you to spread out payments over time, making it easier to afford expensive medical procedures. | APR can be high if you don't pay off your balance in full.during the promotional period. |
| Low interest option | The extended repayment plan doesn’t have a zero-interest promotional period. But rates are lower than most credit cards for this option. | No zero-interest period on this option. You must pay interest until you pay off the balance in full. |
| Flexible repayment terms | You can choose a zero-interest repayment term that works best for you, typically between 6 and 24 months. | Rate goes to 29.99 percent when the promotional period expires. |
| No annual fee | There is no annual fee for using CareCredit. | Some other medical credit cards charge an annual fee. |
| Wide acceptance | CareCredit is accepted at over 200,000 locations nationwide.But only with healthcare providers. | Some other medical credit cards are not accepted as widely. |
| 24/7 customer service | CareCredit offers 24/7 customer service in case you have any questions or need help. | Other medical credit cards may not offer as much customer service support. |
The BEST Way to Pay Out-of-Pocket Healthcare Costs
Hands down, the best way to pay for out-of-pocket medical expenses is to use a Health Savings Account (HSA).
HSAs are tax-advantaged savings accounts you can use to pay for qualified medical expenses.
HSAs offer a triple tax advantage:
- Contributions are tax-deductible.
- The money in an HSA grows tax-deferred.
- With withdrawals are tax-free for qualified medical expenses.
This means that you can save money on taxes now and in the future.
Note: To contribute to a health savings account, you must be enrolled in a qualifying high deductible health plan (HDHP).
If you’re self-employed or a verifiable business owner, you may also be able to contribute by enrolling in an HSA MEC limited minimum essential coverage plan – a low-cost, money-saving policy that meets the requirements of an HDHP and allows you to contribute to an HSA, even if you have a healthsharing plan rather than a formal traditional health insurance product.
To learn more, or enroll in an HDHP or get qualified to contribute to an HSA, click here, and make an appointment with a Personal Benefits Manager. It’s free, and easy!
LEARN MORE: How Much Can an HSA Save in Taxes?
Other CareCredit Review Options
CareCredit can be a godsend for some people.
It can work very well for you if you can’t afford to pay your up-front medical costs in cash but you are reasonably certain you can pay off the entire amount during the zero-interest period.
And the extended financing option currently has an interest rate that is much lower than average credit card rates. So if you can afford the minimum payment, and have no other options, this can be a reasonable option for you.
If you don’t fall in this category, you should explore these other options:
- Make a personal financing agreement with your provider.
- Personal loans from banks and credit unions, or even friends and family.
- Other healthcare credit cards. There are a few healthcare credit cards available that offer special financing options for medical expenses. These cards typically have lower interest rates than regular credit cards, and they may offer promotional interest rates or other rewards.
- Loans against life insurance. If you have a cash value life insurance policy, you can borrow against the cash value to pay for healthcare expenses. There’s no tax on this, as long as you don’t let your policy lapse. There’s also no medical underwriting, and no credit check. You can pay yourself back, or let the eventual death benefit pay off the loan and interest. The life insurance company isn’t worried. They know you’re good for it.
- Hospitalization or accident indemnity insurance. Accident indemnity insurance provides a cash benefit directly to you for medical expenses and lost wages resulting from an accident or qualifying hospitalization. You can use it for any purpose you want. Some policies may also include coverage for death or dismemberment.
- Care coordination services. Some healthcare providers offer care coordination services that can help you find the best financing options for your healthcare needs. These services may also help you negotiate lower prices with healthcare providers.
