Should You Pay Medical Bills with a Credit Card? A Complete Guide

Paying for medical bills is often an unexpected and stressful experience. With the rising costs of healthcare, many Americans find themselves facing large expensive medical bills. When the bills start piling up, using a credit card to pay them off can seem convenient. But is it a good idea? Here is a complete guide to help you decide if you should pay medical bills with a credit card.

Can You Legally Pay Medical Bills with a Credit Card?

The good news is – yes, it’s completely legal to use a credit card to pay medical bills. Most healthcare providers and hospitals accept major credit cards. So you usually have the option to put medical expenses on your credit card, just like any other purchase.

There are a few exceptions though. Some smaller healthcare providers may not accept credit cards, only cash or checks. And in rare cases, a provider might charge an extra processing fee for credit card payments. But overall, paying medical bills with plastic is legal and commonly done.

Potential Pros of Using a Credit Card for Medical Bills

• Access to funds A credit card gives you immediate spending power, even if you don’t have cash readily available. This can be helpful to pay an urgent bill quickly

• Interest-free grace period: If you pay off your credit card balance in full each month, you avoid paying interest on purchases. This grace period allows you to pay medical bills now but delay the payment leaving your bank account.

• Rewards and cash back: Many credit cards offer generous rewards programs and cash back on purchases. If you use the right card, you could earn bonuses by putting medical bills on your credit card.

• Building credit history: Responsibly using a credit card and paying on time helps build your credit score over time. This can open doors to better loan terms and interest rates down the road.

• Price protection Some credit cards provide price protection benefits that refund the difference if an item you bought drops in price later. Though less common for medical bills, it’s a nice perk.

• Purchase protection: Credit cards often insure items bought with the card against theft or accidental damage for a period of time. Again, likely less useful for medical bills but a good feature.

The Potential Cons of Using a Credit Card for Medical Bills

Now let’s look at some of the downsides of charging healthcare expenses to a credit card:

• High interest rates: If you carry a balance and don’t pay off your credit card in full, interest charges can be steep – often between 15-25%. Medical bills can add up quickly, making them difficult to pay off right away.

• Late fees: Credit card companies charge late fees, usually around $30-40, if you miss making payments on time. This adds even more costs if you struggle with repayment.

• Utilization increase: Maxing out your credit card or using a large portion of your available credit hurts your credit score by increasing your credit utilization ratio.

• Quick debt accumulation: It’s easy to continually charge medical expenses as they come up, digging yourself deeper into credit card debt. This debt can be hard to get out from under.

• Aggressive collections: If you fail to make payments, credit card companies are quick to send accounts to collections agencies, damaging your credit. Medical providers may also still send bills to collections.

Tips for Using a Credit Card for Medical Bills

If you do decide to pay medical bills with plastic, follow these tips to be smart about it:

• Only charge what you can afford to pay off in the next billing cycle. Don’t get caught paying expensive interest monthly.

• Pick the card with the best rewards for your situation. A cash back card may get you 1-6% back to offset costs.

• Notify your card issuer if making a large purchase over your normal spending. This prevents a fraud hold from being placed.

• Consider setting up automatic payments from your checking account for at least the minimum due. You’ll never be late if it’s automated.

• Contact your provider ASAP if you may struggle to make a payment. Many offer payment plans or financial assistance.

• Review bills closely to spot errors before paying. Billing mistakes are common – always verify charges are correct.

• If you have multiple medical bills, consider consolidating them onto the lowest interest rate credit card. This simplifies repayment.

• Check if your credit card offers any additional perks related to medical purchases, like extended warranty coverage.

What Happens If You Don’t Pay Medical Bills on a Credit Card?

Failing to pay your medical credit card bills has serious consequences. Here’s what to expect if you don’t pay:

• Late fees will be assessed, often $30-40 for each missed monthly payment. This adds to your overall balance.

• Your credit score takes a hit as the account status goes from current to late to delinquent over time. Even one 30-day late can drop your score.

• High penalty interest rates kick in around 30 days late, jumping from 15-25% to 29.99% APR or more in many cases.

• The credit card account gets handed over to aggressive collections agencies at around 180 days late, destroying your credit rating even further.

• Legal action eventually follows. The credit card company can sue you to recoup what you owe. Wage garnishment may be used to satisfy debts.

• Outstanding debts are reported to the credit bureaus for 7 years from the date of first delinquency. This makes it very difficult to get any kind of financing.

• You may face trouble getting approved for credit or loans, renting an apartment, securing utilities, or even getting a job as long as the black mark remains on your credit.

Clearly, not paying off credit card balances used to cover medical expenses can create lasting damage. It should be avoided at all costs. Communicate with your providers and card issuer early if you anticipate difficulty making payments.

When Does Using a Credit Card for Medical Bills Make Sense?

Given the pros and cons, when is it wise to pay healthcare bills with a credit card? Here are some good scenarios:

• You have the funds to pay off the balance in full when the bill comes due

• You want to earn rewards on a large one-time expense

• You need a short grace period before the payment leaves your bank account

• You hope toestablish/build credit history responsibly

• You can qualify for a 0% APR introductory credit card offer

Conversely, some situations where we recommend avoiding credit cards for medical bills:

• You are already carrying high credit card balances and utilization

• You don’t expect to have the cash to pay off the balance quickly

• You have a history of making late credit card payments

• You’re going through a financial hardship like job loss or disability

• You need an essential medical procedure but can’t afford the out-of-pocket cost

The bottom line is it’s best to avoid accruing interest and getting into credit card debt. But used strategically, credit cards can offer some advantages when paying medical providers. Evaluate your unique situation carefully.

Alternatives to Credit Cards for Paying Medical Bills

If you’re leery of credit card debt, here are some other options to consider for handling medical bills:

• Payment plans – Many medical providers let you pay an extended 0% loan directly instead of lump sum.

• Balance transfers – Transfer the balance to a credit card with a 0% intro APR for up to 21 months.

• Personal loans – Banks and credit unions offer installment loans at lower rates than credit cards.

• Home equity loan – Tap equity in your home if available at lower interest rates.

• Crowdfunding – Sites like GoFundMe allow you to fundraise for medical expenses.

• Government programs – Medicaid, Medicare, and the ACA offer help with medical costs for those who qualify.

• Non-profit assistance – Groups like NeedyMeds, Patient Advocate Foundation, and others provide aid.

• Medical tourism – For large, elective expenses, treatment abroad can provide significant savings.

The Bottom Line – Should You Use a Credit Card for Medical Bills?

There is no one right answer for everyone on whether paying medical expenses with plastic is financially wise or not. It truly depends on your unique circumstances.

If you have a plan to pay off the balance quickly and avoid interest, using credit card benefits may make sense. But tread very carefully if there’s any risk of accruing credit card debt. First explore lower cost financing options you can actually afford.

Whatever you decide, just be sure to closely verify your medical bills, understand your credit card terms, make payments on time, and seek assistance early if needed. Used prudently, credit cards can be a helpful financial tool. But high medical debt also wrecks many Americans’ finances when credit cards are misused. Spend wisely.