Can I use a credit card for medical bills?
The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
The Commonwealth Fund 2023 Health Care Affordability Survey found that about one-third of working-age Americans have some form of medical debt. And of these people, 22 percent had medical or dental debt over $5,000.
Medical debt can be expensive and is often an unexpected cost that many people can’t afford to pay outright. Regardless of whether they have health insurance or not, most people are left with an outstanding bill when they leave the hospital or doctor’s office. When put in this tricky financial situation, it’s only natural for people to wonder: can you pay medical bills with a credit card?
The straightforward answer is yes, you can pay your medical bills with a credit card. In fact, there are credit cards out there specifically made for medical debt, also known as medical credit cards. However, regardless of the credit card type, it’s essential to understand that paying medical debt with a credit card can come with risks.
4 things to consider before paying your medical bills with a credit card
The following four factors apply whether or not you’re specifically using a medical credit card.
1. You can ask for an itemized bill and review every charge
Approximately 80 percent of medical bills have errors on them. These errors are prevalent, and if you’re not careful, you could pay extra for no reason. That’s why you must ask for an itemized bill to ensure you don’t pay incorrect charges. Additionally, you can use this bill to dispute items that shouldn’t have been charged or that your insurance should have covered.
2. Credit cards usually have high interest rates
According to the Federal Reserve, the average credit card interest rate in the last quarter of 2023 was 21.47 percent. If you carry the medical debt over from one month to another, you’ll quickly accrue higher levels of debt due to the high interest rate on your card.
One potential solution is to find a credit card with a 0 percent introductory APR. Usually, this introductory period lasts about a year. If you can pay the debt off within that time, it could help you avoid this problem of increasing debt.
3. Medical debt is treated differently than credit card debt
It’s important to understand that medical debt is handled differently than credit card debt. When you miss a credit card payment, the lender can report the discrepancy as soon as 30 days have passed from the original bill due date. In comparison, you get much more time with medical debt. Medical debt typically won’t impact your credit until the invoice is sent to collections—which can typically happen after a 60-, 90- or 120-day period.
Even after the major credit bureaus receive your medical bill, they can’t report it until it’s gone unpaid for at least 12 months. This grace period is given because health insurance companies often take a while to review, approve and pay medical bills.
When you put medical debt onto a credit card, you essentially give up this grace period. Your debt will be treated like regular credit card debt and therefore can be sent to the credit bureaus as early as after 30 days of nonpayment.
You can also miss your chance to negotiate the terms of the debt. Your medical provider may be open to negotiations for a payment plan or even reducing the debt, but they won’t have these discussions if you’ve already paid them with a credit card.
4. Your credit utilization ratio would be affected
Your credit score is made up of five factors, each of which is weighted differently. One of those five factors is your credit utilization ratio. This ratio is the amount of credit available to you versus how much you actively use each month. A high credit utilization ratio is viewed negatively by the credit bureaus and can hurt your credit.
If you have an exceptionally high medical bill and put it on your credit card all at once, you’ll increase your ratio. As a result, your credit score could potentially decrease.
What are medical credit cards?
One option for consumers facing medical debt is using a medical credit card. Medical cards are offered directly by a medical provider to pay for certain healthcare costs. These credit cards can only be used to pay medical costs and won’t work for regular expenses like groceries.
Medical credit cards don’t always cover all types of medical bills. For example, some medical credit cards might only cover in-hospital charges. Additionally, the medical card will only work at participating medical providers and hospitals. Each hospital and medical provider might have its own policy about accepting medical credit cards.
You can apply for a medical credit card online or directly at a participating medical practice or hospital. Many of these cards have minimum requirements for approval, such as a specific credit score and income level. Some medical cards don’t report their data, such as missed and late payments, to the credit bureaus. But this is decided at the individual card level, so you must read your card’s terms and conditions.
Most medical credit cards come with a promotional offer with no interest charged for between six and 36 months. However, note this isn’t a 0 percent interest period but rather a deferred interest period. This means if you don’t pay your balance in full during the designated period, you’ll end up owing all the interest, which is often calculated at a high rate.
As a result, these medical credit cards can be pretty risky. If you can pay off the balance in time, you avoid paying interest. If you can’t, you’re stuck with a hefty bill and an enormous interest charge.
Here are some examples of medical credit cards on the market right now:
CareCredit
- 0 percent introductory rate for six, 12, 18 or 24 months, depending on the consumer’s credit
- After the initial rate, any remaining balances will have a deferred interest charge of 26.99 percent
- Can be used for hospitals, medical specialists, dentists, medical equipment and veterinary care
AccessOne MedCard
- Not strictly a credit card—more of a repayment plan
- May offer a 0 percent introductory rate to some people
- The APR will vary per individual, depending on their credit
- Requires a credit check but accepts people with low credit scores
- Doesn’t report consumer data to the credit bureaus
- Can be used for general healthcare procedures
Other tips for handling medical debt
A credit card isn’t your only option for paying a medical debt. Here are some alternatives:
- Ask about financial aid: Many hospitals and medical providers offer financial aid programs for low-income individuals. These programs can pay an entire bill or a portion of it. Financial aid programs are available through Medicaid, nonprofit organizations, charities and state and local governments. Find out about the requirements for these programs to understand who qualifies.
- Negotiate: Medical bills are often up for negotiation. You can speak directly with the medical provider and either negotiate a discount or request to be put on a repayment plan. Remember, if you go on a repayment plan, you should understand any fees and interest associated with the plan.
- Take out a medical loan: You can take out a personal loan for medical bills. Personal loans, or medical loans, typically come with much lower interest rates than credit cards. Of course, you’ll need relatively good credit to qualify for a medical loan.
What happens if you don’t pay your medical bills?
If you leave your medical bills unpaid for an extended period, your medical provider can choose to send your debt to collections. A collection account can negatively impact your credit, but you’ll also have to deal with debt collection companies.
The most important thing is not to disregard your medical debt. Unfortunately, it won’t disappear just because you ignore it. Ensure you’re in contact with your medical provider and have a repayment plan. If you end up using a credit card for medical bills, plan to pay off that credit card as quickly as possible.
A solid credit score can help you with future and current medical debts. For example, a healthy score will open the door to better credit cards at lower interest rates, personal loans when needed and more. If you need help with your credit but don’t know where to start, turn to Lexington Law Firm. Our credit repair services can help you address inaccuracies on your credit reports so you can work to achieve better credit.
Note: The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.