Charge it! Charge it! Charge it! has become a common American mantra over the past few decades as Americans rack up more and more credit card debt . Now, according to an article at CNNMoney.com, consumers are starting to pay their mounting medical bills with plastic as well. Consumer advocates say this is a dangerous trend, but experts believe that lenders are going to cash in on this lucrative opportunity by offering specialized "medical" credit cards.
"Out-of-pocket health care spending was already increasing in good times," said Bruce Carlson, publisher with health care market research firm Kalorama Information. "Now with high unemployment, consumers have to reach into their pockets even more to fund their health care."
It only makes sense that financial providers will try to offset the steep drop-offs in retail shopping by targeting the potential market for healthcare credit services. Lenders are in dire need of new ways to boost consumer credit card balances. "Medical expenses are costs that consumers can't avoid unlike other discretionary purchases that they're cutting back on. So why not get into financing it?" Carlson said.
Some lenders have already jumped feet-first into the market. Both GE Money and Citibank offer credit cards which can only be used to cover elective medical procedures, such as LASIK vision correction, liposuction and cosmetic dentistry, costs that are generally paid on an out-of-pocket basis. As an example, GE Money's CareCredit card requires that its customers use the card to pay for medical expenses within a special network of doctors.
David Robertson, publisher of industry newsletter the Nilson Report, expects medical credit cards will remain a niche market. "Given the [financial] difficulties that Americans are under, I'm sure there will be some interest in these products," he said. "But you also have to balance the desire of consumers with the reality that lenders face," Robertson said, referring to the credit crunch that has forced lenders to tighten their belts.
Of course, one thing that remains easy to see is that the moderate-to-low income consumers who are most tempted to use credit cards to pay basic medical expenses are also the ones who can least afford to assume more debt. "[It's] a worrisome trend," said Mark Rukavina, executive director of Access Project, a nonprofit consumer health advocacy group. "Credit cards give an illusion of security. It will just delay the day of reckoning and could become the final push into bankruptcy." He advises that, "Unless there's a risk of losing life or limb, don't use them." To illustrate his point, it's estimated that 1.5 million Americans will declare bankruptcy this year, with 60% of those filings expected to be due to medical bills.
Those consumers who have gotten in over their heads because of excessive medical bills and credit card debt should consider consulting with an experienced bankruptcy attorney as soon as possible. He or she can help you decide whether bankruptcy is a viable option to help discharge the astronomical debts that medical disasters have forced you to take on. Help is just a phone call--or mouse click--away. Make "click it" your new mantra instead of "charge it." It will be much better for your financial health.