Mounting medical bills make most of us nervous, and it’s only natural that you want to pay down that debt as quickly as possible. But, prioritizing quick payment of medical debt isn’t always wise, especially when you pay off that debt by transferring the balance to a credit card.
What Happens When You Pay Medical Bills with a Credit Card?
Every situation is a little bit different, and there are a few circumstances in which it may make sense to pay a medical provider with a credit card. In most cases, though, paying medical bills with a credit card can make your financial situation worse. For example:
- Most medical providers don’t charge interest, or may charge a relatively low rate of interest—for most people, transferring that debt to a credit card increases costs by significantly increasing interest
- If your payment to a medical provider is past due, you may incur a small late charge or none at all—a past-due credit card payment may cost you $35 or more, not including added interest
- When you transfer a large medical bill to a credit card it reduces your available credit—that not only means less access to credit in an emergency, but may lower your credit score
In most cases, medical providers will also be more willing to negotiate a payment plan with you, often even offering a discount on your outstanding balance. You won’t likely get that type of cooperation from your credit card company if you run into trouble making payments. And, if your medical debt is large, you may find that your minimum credit card payments are higher than the payment you could negotiate with your provider.
Finally, medical debt doesn’t impact your credit report and credit score the same way that credit card debt does. Although any past-due debt or collection item has a negative impact, medical debt is treated and perceived differently than credit card debt, which is generally presumed to be discretionary.
The Exceptions: When You May Want to Pay Medical Debt with a Credit Card
One of the reasons medical debt makes so many people uneasy is that no one wants to lose access to medical providers—especially if treatment is ongoing or you’ve recently suffered a medical crisis and may require follow-up. Many medical facilities require payment of the patient’s share on the day of service or require full or partial payment in advance if you are uninsured. Similarly, medical providers may require past-due bills to be paid in whole or part before scheduling future appointments.
That means that while putting medical bills on a credit card is rarely a good financial decision, it may be a good—even critical—life decision. If the provider won’t negotiate a manageable payment plan with you and you don’t have a better option for paying medical bills, prioritize your health. But, explore your options before you decide. There may be a better way.
Better Options for Managing Medical Debt
Before using credit cards to pay a medical debt, consider these possibilities:
- Pay off smaller medical bills: When you’re receiving bills from multiple medical providers, the big picture can be overwhelming. Knocking out some of the smaller debts can make the process more manageable and put you in a position to make regular payments on larger bills.
- Ask about assistance programs: Most hospitals have programs that allow them to forgive debt or offer significant discounts based on your financial situation. If you’re struggling with medical debt, find out whether you qualify for assistance.
- Negotiate with your medical providers: Not only can you negotiate for a payment plan, but your provider may even be willing to reduce the total amount of your debt, eliminate interest charges, and otherwise make it easier for you to settle the bill.
If you’re experiencing problems with overwhelming medical debts and concerned about those debts being collected on, you have options. Contact Barshay Sanders PLLC and we can help answer your questions and concerns.