5 Reasons Not to Pay Medical Bills with a Credit Card


Medical debt is a burden faced by millions of Americans. In fact, a study conducted by The New York Times and the Kaiser Family Foundation earlier this year discovered that 26% of Americans (both insured and uninsured) have suffered severe financial hardship because of struggling to pay their medical bills.

Whether you can’t afford to make payments and are desperately seeking a way to cover those bills or you crave frequent flyer miles, choosing to pay off your medical debt with a credit card can be tempting. Think twice before taking this route, however. You may be discounting these five risk factors.

  1. Payment Options

Medical bills usually remain absent from your credit report unless the bills are sent to collections. However, they will appear if you put them on a credit card, as this type of spending — no matter what you’re using the money for — is almost always reported to the bureaus. However, you may reduce your risk of credit damage caused by missed payments by considering the benefits of a healthcare provider plan.

  • Monthly Payment Options: Healthcare providers regularly offer payment plans for patients, allowing you to budget your debt without hurting your finances.
  • Low Interest: Odds are, you won’t be paying the balance off in full each month, so you’ll be charged interest if you pay with a credit card. Medical providers usually charge low or zero interest for balances in repayment.
  • Income-Sensitive: Healthcare providers are more apt to consider your income when determining a repayment policy, a factor that can help your financial stability.
  1. Runaway Balances

You may view credit as the easy solution to your medical debt problem, but it isn’t always that simple. Suppose you have $5,000 in unpaid medical bills. You decide to pay the balance with your plastic to earn rewards points, and then pay the full sum within three months. Unfortunately, a layoff at work takes you by surprise and you cannot afford to make more than minimum payments. The result is a $5,000 balance with an 18% interest rate attached.

  1. Utilization Imbalance

Debt utilization accounts for 30% of your credit score. Unless you pay off the balance immediately, maxing out your card in favor of a paid debt is likely to hurt your score.

  1. Negotiation Power

Medical bill balances are overwhelming, but they often aren’t set in stone. Negotiating a lower balance may be possible with a medical audit or simple request. However, negotiating a lower credit card balance requires a settlement or charge off on your credit report, a dark spot that can remain for seven years.

  1. Long-Term Loss

Maxing out your credit card and risking non-payment will affect your short-term finances, but it’s the long-term consequences that can be even more harmful. Credit is necessary in several important areas of life, from applying for a new phone service to buying a home or car. Good credit opens doors and can save you money in interest and fees; damaging your score will do just the opposite. Review your options carefully when deciding how to repay your medical debt. Today’s choices will impact your future for years to come.