Paying Medical Bills With My Credit Card: Is it worth?

Paying Medical Bills With My Credit Card: Especially when it comes to managing debt, a lot of personal finance advice is “easier said than done”. For instance, the majority of individuals are aware that having a credit card balance can be expensive. Regretfully, there are still moments when it seems like their only choice. Credit cards offer a quick and easy way to obtain funds.

For instance, you might reach for your card if you receive an unexpected medical bill and are at a loss on what to do. I’m sorry you’re going through this if that describes your circumstances. Financial stress adds to the already difficult process of dealing with health issues, which is already filled with uncertainty and misery.

Paying Medical Bills With My Credit Card

For many Americans, both those with insurance and those without, rising health expenditures are a concern. A KFF report from 2022 states that more than 40% of Americans owe money for medical or dental care. Unsettlingly, 24% of respondents claimed to have unpaid medical costs.

Try not to reach for the plastic right away if you’re trying to figure out how to pay for a medical bill and you don’t have any money in your savings or health savings account. It makes sense to look into alternative payment methods. Using your credit card could have some unexpected implications in addition to possibly earning you rewards points.

1. Using a credit card to pay medical expenditures can affect your credit

Not all debt was created equal in the perspective of credit rating agencies. In contrast to other debt types like mortgages or personal loans, your credit utilisation ratio can be impacted by the balance on your credit card. Your utilisation ratio, which represents the portion of your credit limit that you are really utilising, is a crucial component in determining your credit score. Maintaining a ratio below 30% is optimal. You would have a 70% ratio if the combined limits on all of your cards were $10,000 and your balance was just $7,000.

Here’s another thing to think about. The way medical debt appears on credit records has undergone significant adjustments in recent years. Certain outstanding medical debts won’t be listed at all on your credit report by the bureaus. This covers medical collections that are paid for or older than a year, as well as those that total less than $500. To take things a step further, the Consumer Financial Protection Bureau (CFPB) seeks to have all medical invoices deleted from credit reports.

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2. There might be a less costly method of borrowing

The instantaneous use of a credit card is one of its benefits. This can play a significant role if you’re attempting to manage the stress of an unanticipated health issue. There have undoubtedly been times in my life when, while knowing it would cost me extra, I chose to use my credit card since it was the simplest option.

It truly could save you money if you have the mental capacity to consider alternative possibilities. As of December 11, the average credit card interest rate had nearly reached 30%, according to Forbes. Conversely, some of the best personal loans have interest rates that are lower than 10%. Better still? Your medical practitioner may be able to work out an interest-free payment schedule for you.

Say you have a $1,500 medical bill that needs to be paid.

• According to our credit card interest calculator, it would take 19 months to pay off and you would accrue interest of more than $400 if you paid $100 a month at a 30% annual percentage rate.
• According to our personal loan calculator, you would pay about $100 in interest for a $100 monthly personal loan at a 10% annual percentage rate. The debt would be paid off in sixteen months.

3. It’s possible that you can receive financial support.

You might not even need to borrow money if you can get assistance with paying the payment. Numerous programmes exist that could potentially cover a portion of the expenses associated with receiving medical care. See your healthcare professional for guidance if you’re unsure about where to begin. Additionally, you could try to locate a patient advocate who can provide you with guidance on what to do next.

4. You may not owe as much money as you believe.

Regardless of the payment method you choose, request to see an itemised bill and thoroughly review it. Over 40% of respondents believe they have discovered an error on a medical or dental bill they have received, according to KFF.

Furthermore, hospital bills can resemble Christmas marketplaces in that various persons will be charged varying sums. It is sometimes the case that patients without insurance will pay more than those with insurance, so find out what the going fee is for the treatment you received.