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Paying Medical Bills With a Credit Card

Sally Herigstad

Coronavirus testing is now free, but you could still end up with big medical bills if you require hospitalization or treatment for COVID-19 -- even with health insurance. Should you pay your bills with a credit card?

Your credit card is one payment option that most hospitals and large medical providers will accept. You might prefer to charge medical expenses if your credit card comes with a 0% annual percentage rate on purchases or earns cash back rewards.

On the other hand, using a credit card might not be wise if your card has a high interest rate or you don't expect to pay off your balance.

And if you tend to be a spender, the danger is getting in the habit of pulling out your card for unnecessary purchases. Here's help deciding when to use your credit card to pay for medical bills and when to leave your card in your wallet.

[Read: Best 0% APR Credit Cards.]

Should You Use a Credit Card to Pay for Medical Bills?

Consider the pros and cons of using your card to pay for your medical expenses, whether they are related to the coronavirus or another illness. Here are the positive aspects of paying for medical bills on credit:

Credit cards may help you get care when you can't write a check. You may choose to pay by credit card when you lack the cash to cover a procedure, when a provider doesn't accept checks or when you don't have your checkbook.

"Even veterinarians will take credit cards for your pets. Credit cards are really good if you can't put that money down to get care," says Ande Frazier, certified financial planner and editor in chief of myWorth, a personal finance site for women.

Credit cards can be convenient. You can apply for and get a card almost instantly, as long as you meet credit requirements -- sometimes while you're at the provider's office.

Credit cards may offer a low-interest or no-interest promotional period. If you use a credit card with a 0% APR period, your interest doesn't start to accrue until that period ends. That short time frame before the interest rate rises can be motivation to pay off the balance.

Credit card rewards and perks. Getting cash back rewards or airline miles can be a plus when paying for medical expenses.

Credit cards can help you build a positive payment history. Payment history is the most important factor in your credit score. Your credit card can help you build credit if you make your payments on time and the card issuer reports them to the credit bureaus.

You do not need to carry a balance or pay interest to build a credit score.

[Read: Best Balance Transfer Credit Cards.]

When Is Using a Credit Card for Medical Bills a Bad Idea?

You might want to avoid paying medical bills with a credit card in some situations. These may include:

You think your insurance company might pay for everything. Don't give providers your credit card before you know what insurance will cover, advises Adria Gross, president and CEO of MedWise Insurance Advocacy.

"A lot of times, it takes six months to two years to get your money back," she says.

You could risk creating more debt by paying with a credit card or loan. "Most medical debts do not carry interest," says Leslie Tayne, debt resolution attorney at Tayne Law Group in New York and author of "Life & Debt," a money management book.

But a credit card will accumulate interest if you carry a balance and don't have a 0% rate.

A medical debt charged to a credit card can snowball, Tayne says. "I have many clients who get into debt as a result of putting medical bills on credit cards," she says.

Adds Tayne: "If you always put unexpected bills on credit cards, and you're using credit cards to supplement your cash flow, you will end up in debt."

Using credit cards will hurt your credit score. Credit card companies can report late payments to the credit bureaus once they're 30 days past due, but health care providers won't report late accounts for at least six months.

Even if you never miss a payment, your cards can hurt your credit score, say, if you're using too much of your available credit.

You can't pay on time. "If you're late on a payment, you can incur a late fee, or you could even lose your promotional interest rate," Frazier says. "It's important to understand what the (credit card) agreement is."

[Read: Best Cash Back Credit Cards.]

What Are Other Ways to Pay Medical Bills?

The coronavirus means that you might not be able to prevent a pile of medical bills. But you might be able to take some measures to avoid making a bad situation worse, such as:

Avoid outsize bills before they start. Try to know your payment options before a medical emergency, if possible, Tayne says. "During an emergency or medical necessity, it's not an easy time to make decisions."

When possible, designate someone to help you make decisions, Tayne adds.

Check your bill for mistakes. Never pay your medical bill until you've seen an explanation of benefits and you understand the charges. "You might have duplicate bills," Gross says.

Make sure your insurance covers what it should. Sometimes you have to ask questions or be persistent. A savings tip: Ask the provider if there is another way to code your bill so the insurance company covers more of it, Tayne says.

Negotiate with your health care provider. When facing a bill you're not sure about, Gross says, negotiate it. She suggests using Medicare rates as a jumping off point for negotiations.

Ask for a bill payment plan. Hospitals are not surprised if you can't promptly pay off a $10,000 bill. "If I had emergency surgery, I'd call the hospital and talk about the options I had, even if I had the money to pay it off," Tayne says.

You shouldn't drain all of your financial resources at once. "Sometimes they'll take as little as $5 or $10 a month," Tayne says.

Get a home equity line of credit. If you own your home, you may be able to get a loan with a reasonable interest rate to pay a bill or consolidate medical bills. But that means putting your home on the line for medical debt, which could result in losing your home if you can't make the payments.

Get a loan from family members or friends. If you can borrow from someone without endangering his or her financial security or your relationship, think about asking for a loan.

Consider offering a better interest rate than your friend or family member could get with a deposit elsewhere but less than you would pay on a credit card. Remember to draw up a contract, Frazier says.

File for bankruptcy. Bankruptcy is a legitimate tool when people need it, but in most cases, you can find other ways to deal with your debt.

"Bankruptcy has so many rippling effects, in terms of, you're carrying that for seven years," Frazier says. "It affects your credit. Your credit score is not just about when you buy a car or a house. Your credit rating affects your car insurance premiums; it affects different rates you could get on any kind of loan."



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