While it may be difficult to predict exactly when you’ll encounter medical expenses, the simple fact is they are inevitable. Everyone will have to go through the stress of dealing with medical issues and the costs that come with them at some point. And, unfortunately, some of these expenses can be rather large, especially in this day and age. Because of these exorbitant costs, many people turn to their credit cards to pay for them. However, is this the best option?
Before choosing to pay for your medical expenses using a credit card, it’s important to understand other options available.
Medical Debt vs. Credit Card Debt
While your first thought may be to pay for your medical debt using your credit card, it’s essential to understand how it differs from credit card debt.
The most important difference between medical debt and credit card debt is that medical debt does not always affect your credit score immediately. This is helpful because it essentially gives you more time to pay your medical expenses off without impacting your credit score.
While each medical provider handles payments differently, they are usually quite flexible. They understand people were not expecting these expenses. If, by chance, your medical debt does eventually get sent to a collection agency, you’ll typically be given a period to pay off your debt before it negatively affects your credit history.
On the other hand, any late payments to your credit card could immediately harm your credit score. So, if you are choosing to use your credit card to pay for medical expenses, you’ll want to be sure that the expense isn’t going to cause you to be late or deficient in your credit card payments.
Deciding Whether to Use Your Credit Card to Pay for Medical Bills
Many people want to settle any debts as soon as they come in, but before you jump right into paying medical bills, always review the statement thoroughly to ensure it’s accurate. If you have any questions or notice any discrepancies, contact your insurance company to make sure you’re only paying what is necessary.
Then, once you have your final expense amount, determine if you can afford to put it on your credit card. If it’s something you can pay off relatively easily and quickly, then it’s likely fine. However, if you cannot pay it off within your credit card billing cycle, your better option would be to work out a payment plan with the medical provider.
Many medical providers are lenient in payment plans and frequently won’t charge you any interest. They understand that medical expenses are usually unexpected and will work with their patients – you just have to ask.
Other Payment Options
In some cases, medical providers may not provide a flexible payment plan as an option and instead require you to make the full payment upfront. However, that doesn’t mean that you need to turn to your credit card as the only possibility for payment.
A personal loan is another option to pay for medical expenses. Most personal loans offer rates much lower than credit cards, and since these loans have set monthly payments, you’ll know exactly when you will pay off the debt.
What if your medical expenses are significant or will be costly and ongoing? If this is the situation, you may want to consider using the equity in your home via a Home Equity Loan or Home Equity Line of Credit (HELOC). Because you’re using your home as collateral with this type of loan, the interest rates are usually much lower than credit cards and have more flexible repayment terms.
We’re Here to Help!
While medical expenses are not ideal, it’s good to know that you do not need to go into credit card debt to pay for them. There are many other options to pursue before going the credit card route.
If you’re facing costly medical bills, please stop by and see us. Our team will work with you one-on-one to find the best solutions to help you alleviate the debt without incurring excess fees or high interest. Please stop by any of our convenient branch locations or call us at 800-782-4899 for more information.
Each individual’s financial situation is unique and readers are encouraged to contact the Credit Union when seeking financial advice on the products and services discussed. This article is for educational purposes only; the authors assume no legal responsibility for the completeness or accuracy of the contents.