Should I Put Medical Bills on a Credit Card?

medical bills

Medical bills are a big-ticket expense for many Americans. Even those covered by health insurance stand to pay huge amounts out-of-pocket in the event of a medical emergency or ongoing treatment. In fact, one study found that 1.7 million Americans live in households that declared bankruptcy due to medical costs.

It might seem silly, or outright unfair, that something as fundamental as medical expenses might result in destitution, but that’s the world we live in today, and many Americans struggle to cope. When faced with a hefty medical bill, sometimes you’re left without options — maybe the less-than-ideal, high interest credit card in your wallet is your only respite. But does it make sense to pay for medical bills with a credit card?

Medical bill payment options

In the wake of a costly medical procedure, you should always look to pay the bill outright. Paying with cash, check or debit card will satisfy the bill from the outset, and therefore costs will not plague you down the line. But, of course, this isn’t always realistic. Very few of us have tens, or even sometimes hundreds, of thousands of dollars in savings to cover medical costs.

The next best option is a payment plan. In many cases, you can set up a payment plan with the billing department, and as long as you stick to it and make minimum payments, your bill won’t go to collections. This is a very popular payment method for those with the overall means to pay medical bills but without the upfront capital to cover it in the moment.

Paying for medical bills with a credit card should be a final resort. This method of payment will incur interest payments and make your payment that much more costly. A large enough medical bill can loom over your finances, and potentially ding your credit, for years to come. This is a tough position to be in because not only will it drain your bank account, but also necessitate credit restoration down the road.

There are credit cards specially designed for medical costs, but these are also a slippery slope. Medical credit cards usually offer a 1 – 2 year long promotional, low financing period, but if the balance extends past that window, you’re likely to take on huge interest payments.

The primary advantage to charging a medical bill to a credit card is obvious: you’re able to pay your bill. While your logical brain recognizes that this might not be the most sound financial decision, when faced with a health crisis you might not have a choice. The alternative — not paying your bill at all — could be much worse for you financial future.

What happens if medical bills go unpaid

Recently, the major credit bureaus instituted a change in the way that medical bills are reported. A 180-day waiting period is now required before reporting a medical debt to the bureaus. If medical bills go unpaid for a prolonged period of time they will be handed over to collections. However, FICO’s newest scoring model, FICO Score 9, ignores paid collection accounts. That means that if you pay your medical collection, it won’t negatively impact your score.

If you have any account in collections — medical or not — you will likely see a negative effect on your credit. The degree of damage is usually correlated with how high your score is, how long the account has gone unpaid, and how much you owe. If the debt is not handled after that, you run the risk of repossession of property, wage garnishment, and other dire financial consequences. This is where credit repair can help.

Don’t let large medical bills, or any other kind of debt, weigh down your financial goals. As a distinguished leader in the credit repair industry, Lexington Law has helped consumers improve their understanding of credit more than 20 years. Contact Lexington Law today if poor credit is inhibiting your ability to pay off debt.

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