3 Reasons Rewards Credit Cards Beat Medical Credit Cards

A credit card is a credit card, right? Nope -- and medical credit cards specifically are different from standard consumer credit cards. You've perhaps seen literature about (or been offered) a medical credit card in a doctor's or dentist's office. Unfortunately, if you're resorting to plastic to cover a medical bill, these cards really aren't the best deal out there.

So let's dive into how medical credit cards differ from rewards credit cards -- and see why it's best to use plastic for medical bills only under very special circumstances.

1. Potential to earn rewards

Medical credit cards don't earn rewards of any kind -- let alone those fixed to different types of spending. Granted, you'd also be hard-pressed to find a rewards card that has medical care as a bonus category.

But our own list of the best credit cards for medical expenses features many excellent flat-rate rewards cards. Using one of these cards means you'll earn more than 1% (or 1 point per $1) on a medical bill. You won't earn 3% or 5%, but getting a rate of 1.5% or 2% can still earn you a sizable chunk of points or cash back on an expensive charge from your doctor's office or hospital.

2. 0% APR vs. deferred interest

One of the sneakier aspects of certain types of credit cards (notably, medical and store credit cards) is the way they handle introductory interest periods. Many of the best rewards credit cards have a solid period of true 0% APR -- meaning they'll come with several months to possibly over a year where you can carry a balance (as long as you're making at least the minimum payment every month!) without being charged interest. If you still have a balance left over at the end of that period, you'll be charged interest on the remaining balance.

But medical credit cards charge deferred interest instead. You'll still get that period without interest charges (the length of it often depends on how big your bill was). But when it's over, you could be in for a world of hurt if you've still got a balance. Even if you owe just $100 on what was once a $2,500 balance, you'll be charged interest on that entire $2,500. Ouch.

3. Welcome bonuses

One of the best things about opening a new credit card is getting the chance to earn a welcome bonus. Depending on the amount of your medical bill, you might be able to entirely cover the required spending for a bonus based on one bill. I've earned bonuses for multiple cards this way.

Medical credit cards don't come with welcome bonuses, however. Their main perk is the ability to pay off a big bill over time without interest charges (assuming you can pay off the bill entirely before that deferred interest period ends). To get your chance at one of the top sign-up bonuses, you'll have to look to regular rewards cards.

A few caveats about putting medical bills on a credit card

None of this is to suggest that you shouldn't hesitate to use a credit card to pay off a medical provider, as this isn't always your best option under any and all circumstances. Personally, I've been using rewards credit cards for medical bills (including a series of expensive dental surgeries) lately.

But I feel comfortable doing so because I've had the ability to either save money for the procedures ahead of time (then use the card for payment and immediately pay it off and enjoy the rewards points that earns me) or I have a card with an active intro APR and I get more time to pay off the charges. If this doesn't describe your situation, it's better not to put your medical bills on a standard credit card.

How should you pay your medical bills?

It's an unfortunate fact that medical care in this country is obscenely expensive, and taking on credit card debt in the process of paying for it isn't an ideal situation. There's almost always a better option to deal with medical debt. For example, personal loans usually have lower APRs than credit cards (and they're fixed, too) and can be a good way to cover a big medical bill.

Your medical provider may also offer payment plans with lower or no interest -- just ask. And depending on your financial circumstances, you may qualify to have some or all of your medical debt forgiven due to financial hardship.

It's also worth making sure that your insurance company covered as much of your bill as it was supposed to -- medical billing errors are very common, so don't assume you owe as much as that scary-looking bill says.

The rules around credit reporting have also changed recently, so a small medical debt or a past paid-off medical debt sent to collections is no longer the kiss of death for your credit score.

If you've got the money available to cover a medical bill, you can absolutely benefit from earning rewards or cash back (or even making the minimum spend for a welcome bonus) by using a rewards credit card to pay it. Just be sure you can pay off the charges before interest comes due -- otherwise, explore your options to pay what you owe.