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.

A study found that the average medical debt incurred in 2020 was $2,424. In fact, 50 percent of Americans hold medical debt, with debt collectors holding $140 billion total from that debt. Medical debt can be expensive and is often an unexpected cost that many people can’t afford to pay outright. Regardless of whether or not they have health insurance, most people are left with an outstanding bill when they leave the hospital or doctor’s office. And many individuals have to use a credit card for medical bills—or multiple credit cards. 

There are certain things consumers should consider in this instance. For example, they should understand all the potential drawbacks of using a credit card for medical bills so they can be prepared. Additionally, they might want to think about using credit cards that are specifically for medical bills. Having all this information will help them determine if using a credit card for medical bills is the right choice.

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 three out of four medical bills will have errors on them. These errors are prevalent, and if you’re not careful, you could end up paying extra for no reason. That’s why you must ask for an itemized bill to help 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 first quarter of  2021 was 15.91 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 initial period lasts for about a year. If you can pay the debt off within a year, it could help you avoid this problem of increasing debt. However, note that this could be different if you use a credit card specifically for medical bills. 

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 score 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 won’t report it until it’s 180 days past due. 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’re essentially giving up this grace period. Your debt will be treated out like regular credit card debt and therefore sent to the credit bureaus 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, making up 30 percent of your overall credit score. 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 pull down your credit score. 

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, credit score will potentially decrease. 

What are medical credit cards?

One option for consumers who are facing medical debt is to use a medical credit card specifically. 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, such as groceries. 

Note that 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 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’ll need to read your card’s terms and conditions. 

Most medical credit cards come with a promotional offer with no interest charged for anywhere between six and 36 months. However, note that this isn’t a 0 percent interest period but a deferred interest period. This means that 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 quite risky. If you can pay off the balance in time, you avoid paying interest. However, 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

• Zero percent introductory rate for six to 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 dental treatment, eye exams, LASIK, hearing services, cosmetic surgery, weight loss surgery, veterinary costs and more.

Wells Fargo Health Advantage Card

• Sometimes offers a zero percent introductory rate for six to 18 months, depending on the consumer’s credit.
• APR of 12.99 percent.
• If a consumer receives the introductory rate of 0 percent, any remaining balances will have a deferred interest charge of 12.99 percent.
• Accepted at thousands of hearing, vision, dental and veterinary offices across the country.

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’s 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. Some alternatives are:

• 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. Note that 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?

As we’ve mentioned, there’s a 180-day waiting period before your medical debt appears on your credit report. After that, your medical provider can choose to send your debt to collections. Not only will a collection charge negatively impact your credit, but you’ll also have to deal will debt collection companies.

The most important thing is to not disregard your medical debt. Unfortunately, it won’t disappear just because you ignore it. Make sure you’re in contact with your medical provider and you have a plan for repayment. If you end up using a credit card for medical bills, try to plan to pay off that credit card as quickly as possible. 

Having a solid credit score can help you with future and current medical debts. A healthy score will open the door to better credit cards at lower interest rates, personal loans when you need them and more. Lexington Law Firm helps individuals review their credit reports so they know their account is accurate. Our credit repair consultants can work with you to address inaccuracies on your credit reports so you can hopefully achieve better credit. 

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