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You can plan for most life expenses—your rent, your groceries, your car payment—but you can't always plan for medical bills. Almost two-thirds of Americans worry about being able to afford unexpected medical bills, according to KFF (Kaiser Family Foundation), and no wonder: The average cost of a three-day hospital stay is $30,000, and treating a broken leg can cost $7,500, Healthcare.gov reports. When a trip to the emergency room leaves you with a bill bigger than what you have in your savings account, should you whip out a credit card? You can pay medical bills with a credit card, but there are other options that typically make more financial sense.
What to Consider Before Paying Medical Bills With a Credit Card
Considering how high medical bills can be, paying with a credit card could leave you with high-interest debt that can be difficult to pay off. But there's another reason to think twice about paying a medical bill with a credit card: Medical debt is treated differently than credit card debt.
If you miss a credit card payment, the credit card issuer can report the late payment to the credit bureaus as soon as it's 30 days past due. Medical debt, however, doesn't start to affect your credit score until the provider sends the bill to collections, which can take as long as 60, 90 or even 120 days.
Even after your bill goes to collections, you've still got some extra time: The major consumer credit bureaus (Experian, TransUnion and Equifax) don't report medical debt until it's 180 days past due. They offer this special treatment because they know it takes some time for health insurance companies to approve and pay medical claims.
When you put your medical debt on a credit card, however, it becomes plain old credit card debt, meaning you lose the 180-day grace period that medical debt enjoys. You'll also lose the ability to negotiate a payment plan or reduced bill with the medical provider (more on this below).
Before you rush to pay with a credit card, take some time to evaluate your options. Start by making sure the medical bill is correct. It's not uncommon for medical bills to contain errors, so be sure to review your bill carefully and contact your health care provider if you have questions about any charges. If your insurance didn't pay for a procedure it should have covered, there may be a billing coding error. Talk to your provider and insurance company to resolve the issue and confirm how much of the bill is actually your responsibility before you decide how to pay.
When Does Using a Credit Card Make Sense?
If you're absolutely confident you can pay the balance in full when the credit card bill comes due, there can be some advantages to paying a medical bill with a credit card. For example, if you use a rewards credit card to cover that $7,500 bill for your broken leg, you could rack up plenty of miles, points or cash back.
However, it's important to consider your credit limit in relation to the size of the bill. Your credit utilization ratio, which measures how much of your available revolving credit you're using, is a key factor in your credit score. It's generally recommended to keep your credit utilization ratio under 30%; higher ratios can negatively affect your credit score. If you put that $7,500 medical bill on a credit card with a $10,000 limit, you're using a whopping 75% of the available credit on that card, and your credit score may drop as a result.
A credit card with an introductory 0% annual percentage rate (APR) on new purchases can offer a way for you to pay a large medical bill without paying interest. You could pay a $4,800 medical bill with a credit card offering a promotional 12-month 0% APR, make a $400 payment every month ($4,800 divided by 12), and have the entire bill paid off in 12 months without incurring any interest. Just be sure you can commit to paying the bill in full by that time, or any unpaid balance will begin to accrue interest.
It's important to distinguish between medical credit cards and regular credit cards. Medical credit cards can be used only for medical expenses; you can apply for them online or through medical providers' offices. They typically offer 0% APR financing for six, 12, 18 or 24 months. Unlike regular credit cards, however, medical credit cards generally charge deferred interest. What's the difference?
A regular 0% intro APR card charges interest only on the balance remaining when the introductory period expires. If a card has deferred interest and you have a balance when the introductory period ends, though, all of the interest that was deferred may get added to your balance. Because medical credit cards tend to have high interest rates, this can add substantially to the total cost of your medical bill. You'll also lose the 180-day grace period for medical debt if you put your bill on a medical credit card.
Should You Use a Rewards Card to Pay Medical Bills?
You shouldn't use a rewards card to pay medical bills just to get rewards. If you can't pay the balance in full when your bill comes due, the interest that accrues could cost you far more than you'll earn in rewards.
If you know you'll be able to pay the balance in full, however, using a rewards credit card strategically for a medical bill could pay off. For example, many rewards cards offer introductory cash bonuses if you spend a few thousand dollars with the card within the first few months of account opening. A medical bill might help you spend that amount.
Best Credit Cards to Use for Medical Bills
If you're considering paying medical bills with a 0% introductory APR credit card or rewards credit card, here are a few to check out.
Citi® Diamond Preferred® Card: The 18-month 0% intro APR on purchases and balance transfers on this card from our partner is one of the longest around. After the intro period you'll pay a variable APR of 14.74% to 24.74% depending on your creditworthiness. You could either use the card to pay a medical bill or, if you've already paid with a high-interest credit card, apply to transfer the balance to the Citi® Diamond Preferred® Card. (You'll pay a 3% fee with a $5 minimum on the transferred balance.) This card has no annual fee, but offers no rewards, either.
Chase Freedom Unlimited®: In addition to a 15-month 0% intro APR on purchases with no annual fee, this card offers plenty of rewards that can benefit you long after your medical bill is paid off. Get 5% cash back on grocery store purchases up to $12,000 in the first year, 5% cash back on Lyft rides through March 2022, 3% cash back on drugstore and restaurant purchases (including takeout and qualifying delivery), and 1.5% cash back on all other purchases. Chase also offers purchase protection for items bought with the card—a perk that's increasingly hard to find. After the intro period ends, you'll pay a 14.99% to 23.74% variable APR depending on your credit score.
Discover it® Cash Back: The 14-month 0% intro APR on purchases gives you time to pay your bill. (Your rate will be 11.99% to 22.99% variable once the intro APR ends.) There's no annual fee, and you'll earn rewards including 5% cash back on up to $1,500 in combined purchases on quarterly rotating categories such as Amazon.com, grocery stores, restaurants, gas stations and more when you activate, plus 1% cash back on all other purchases. You'll need to remember to register quarterly, though, to earn the bonus category rewards. For new cardmembers, Discover matches all the cash back you've earned after the first year, with no limit.
Capital One Quicksilver Cash Rewards Credit Card: Enjoy 0% intro APR on purchases for 15 months with this no-annual-fee card (after which you'll pay 15.49% to 25.49% variable), plus a one-time $200 cash bonus when you spend $500 on purchases within 3 months from account opening. You'll receive unlimited 1.5% cash back on every purchase—no need to sign up for rewards or keep track of rotating categories. After the 15 months are up, however, this card's highest possible APR is one of the highest around.
Other Ways to Pay Medical Bills
Credit cards aren't your only option for managing a major medical bill. Before you pull out the plastic, investigate these alternatives.
- Try to negotiate your medical bills. Medical providers often offer substantial discounts if you pay a lower amount in full or make a large down payment and pay the remainder of the bill over time.
- Work out a repayment plan. See if the provider will break the bill down into monthly payments, so you can spread payments over time. Be sure to take any interest or fees the provider charges into account and consider how much they'll add to your total cost.
- Ask about income-driven hardship plans. Low-income patients may qualify for this variation on a standard repayment plan. Income-driven hardship plans forgive part of your medical bill and divide the remainder into monthly payments.
- See if you qualify for financial assistance. Many hospitals offer charity care, which provides free or discounted medically necessary treatments for those who cannot afford to pay. Depending on your income, you may be able to get help paying your medical bills from Medicaid, local or state financial aid programs, nonprofit organizations or charities.
- Apply for a personal loan. Personal loans often have lower interest rates than credit cards, and their fixed monthly payments can make it easier to budget for your health care costs. Avoid personal loans secured by your home or other assets, however, or you could lose them if you default.
The Best Way to Pay Medical Bills
Paying your medical bill with a rewards credit card could help you earn points, cash back or travel miles. Paying your bill with a 0% intro APR credit card could help make your medical bill payments more manageable. In both cases, however, you'll want to be sure you can pay the credit card bill in full, or you could be saddled with high-interest debt that's difficult to pay off.
Because credit card debt has greater potential to negatively affect your credit score than medical debt does, a credit card generally isn't the best way to pay your medical bills. Before you reach for your credit card, take the time to explore other options for paying your medical bills. It could benefit both your bank account and your credit.