Using a credit card to pay medical bills can seem like a convenient option, especially if you don’t have health insurance or enough cash savings to cover the costs. However, there are some risks to consider before whipping out the plastic to pay your medical debt. In this comprehensive guide, we’ll go over the pros and cons of using a credit card for medical expenses and provide tips on how to make the best decision for your financial situation.
The Benefits of Using a Credit Card for Medical Bills
Access to Funds
One of the main benefits of paying medical bills with a credit card is access to funds. Most healthcare providers accept major credit cards so you can tap into your available credit limit to pay for care even if you don’t have the cash on hand. This can be helpful to bridge the gap for example, if you have an urgent medical expense that exceeds your emergency fund balance.
Convenience
Paying with a card is quick and easy. You don’t have to deal with sending checks in the mail or arranging bill pay through your bank account. Many medical offices even allow you to store your card information securely on file to simplify future payments.
Rewards and Perks
If you use a rewards credit card, you can earn points, miles, or cash back by charging your medical expenses. This allows you to offset some of the costs. Cards targeted for medical spending often offer bonus rewards.
Short-term Financing
Charging medical bills to your credit card essentially gives you a short-term loan with a 0% interest period until the payment due date. This delay gives you time to figure out how to come up with the money without accruing interest charges.
Protection
Credit cards provide stronger consumer protections than other forms of payment. You can dispute fraudulent or erroneous charges and temporarily withhold payment while the issues get resolved.
Potential Downsides of Using Credit for Medical Expenses
Despite the benefits, using credit cards for healthcare costs also has some risks:
High Interest Rates
If you can’t pay off the balance in full by the due date, interest charges can be very expensive. Credit card APRs typically range from 15% to 25% or more. The debt can snowball quickly.
Credit Score Damage
Maxing out cards or missing payments can hurt your credit scores. Lower credit scores make it harder to qualify for loans and credit cards in the future.
Prepayment Penalties
Some medical providers charge fees for credit card payments, typically around 3%. This directly cuts into the value of any rewards you might earn.
Overspending
It’s easy to overspend when you don’t have to hand over physical cash. Using credit could tempt you to get procedures or treatments you can’t really afford.
Limited Credit
If you have poor credit, you may only qualify for a card with a low credit limit. This restricts how much medical spending you can finance.
Tips for Using a Credit Card for Medical Bills
If you do decide to pay medical expenses with a credit card, here are some tips to make it more affordable:
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Ask about any prepayment penalties or convenience fees charged by the provider so you can calculate the true cost.
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Compare cards to find the best rewards rate for medical spending and zero interest promotion offers.
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Make a plan for how you’ll pay off the balance before interest kicks in. Don’t just make minimum payments.
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Consider getting a medical credit card designed for healthcare expenses if you’ll be charging extensive long-term treatment. They usually offer low or 0% intro APRs.
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Set a reasonable credit limit on the card you use for medical bills to avoid overspending.
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Review the charges closely to ensure they are accurate before paying with a credit card. Disputes are harder after you’ve paid.
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Ask the provider if they offer an interest-free payment plan as an alternative to credit cards for financing costs over time.
Other Ways to Pay Large Medical Bills
Using credit isn’t your only option when facing large medical bills without adequate insurance. Here are some other paths to consider:
Payment Plans: Many hospitals and doctors will let you set up a monthly installment plan interest-free or at a low interest rate. Make sure repayment terms are affordable for your budget.
Medical Sharing Ministries: These non-profit organizations have members share healthcare costs. Pre-existing conditions may not be covered.
Negotiating Costs: You can often negotiate pricing and secure discounts, especially if you pay upfront in cash.
Crowdfunding: Asking for help with medical bills through crowdfunding sites has become more socially acceptable.
Medical Tourism: For certain procedures, it may be cheaper to travel to another country and pay out of pocket than to use US healthcare.
Balance Transfers: Transferring your medical debt to a credit card with a 0% intro APR for balance transfers could let you finance it interest-free for 12-18 months.
Home Equity Loan: If you have substantial home equity, a home equity loan or line of credit may offer lower interest rates than credit cards for repaying medical costs over time.
401(k) Loan: You can borrow from your 401(k) balance and repay the loan with interest. However, it reduces retirement savings.
The Bottom Line
Paying medical bills with a credit card can make sense in some situations when used carefully and strategically. But it also poses risks, so consider all your options and make a plan for repayment before charging healthcare costs. If you do use credit, take steps to minimize interest charges. Most importantly, don’t let medical debt overwhelm you. Seek help negotiating costs and discuss payment alternatives with your providers.
Most Adults With Past-Due Medical Debt Owe Money to Hospitals
More than 15% of adults in the U.S. report past-due medical debt, with nearly 73% owing some or all of that debt to hospitals.
Secret $50,000 Credit Card For Medical Bills | Credit Card For Healthcare Needs | Credit Viral
FAQ
Is it okay to pay medical bills with credit card?
“Most medical bills are allowed to be paid using a credit card unless the provider specifies otherwise. But be forewarned that some providers will pass on credit card processing fees,” says Lynch.
Can you pay for medicine with a credit card?
You can pay for prescription drugs with your CareCredit credit card at in-network pharmacies. These drugs can make up a big part of your overall healthcare costs.
What bills cannot be paid with a credit card?
That depends on the bill and the business. You might be able to pay bills with a credit card. Mortgages, rent and car loans typically can’t be paid with a credit card. You might have to pay an extra fee if you use a credit card to pay some bills, like your utility bills.
Can I pay my health insurance with a credit card?
When you pay your first premium, you might be able to use a credit card. But after that, you’ll usually have to set up an electronic funds transfer (EFT) or write personal checks from your checking account.
Should you pay medical bills on credit?
One good thing about using credit to pay for medical bills is that it may help you get care when you can’t write a check. If you need to pay for a procedure but don’t have cash on hand, or if the provider doesn’t take checks, you may choose to pay with a credit card. “Even veterinarians will take credit cards for your pets.
Can a credit card pay for medical expenses?
However, if you need to use a credit card for medical costs, there are some that offer rewards and benefits for medical purchases, like getting prescriptions filled or seeing a doctor. Here are the best credit cards for medical purchases.
Should you use a rewards credit card to pay medical bills?
Unexpected expenses like medical bills can represent opportunities to earn more rewards. You may have enough money in savings or other parts of your budget to cover a medical bill in full. When you pay your doctor with a rewards credit card, you can get an extra benefit.
Should you pay off a medical bill on a credit card?
“Before you pay off a medical bill on a credit card, first use all of your other options to lower or repay the balance,” Nitzsche tells Select. Explain your financial situation to your health-care provider if you can’t afford to pay the full balance.
Should you skip paying medical bills with a credit card?
Even if you pay your bill on time without fail, high utilization will have a negative impact. You should probably avoid paying for expensive medical bills with a credit card because of this possible problem, unless you can pay the full bill when it’s due.
Can you finance a medical bill with a credit card?
When it comes to paying for medical bills, there are usually better ways than using a credit card. Yes, using a credit card might be the easiest way to solve the problem, but it comes at a high cost, both in terms of money and credit score.
