TULSA, Okla. — Unanticipated medical bills can leave you scrambling for a way to pay.
Often, people without enough emergency cash on hand to cover the expense turn to credit cards.
However, if you don't have a 0% interest card, using it can quickly escalate an already big bill by adding interest to the cost of paying it off.
Currently, most credit cards charge between 5.75% and 36% interest.
But, that's not the only downside to using a credit card to pay off medical debt, according to Katie Kelton at Bankrate. "15% of credit card debtors actually say that they're in debt because of a medical bill."
She adds, "The thing about putting all of that debt on a credit card is then you're subject to any impact on your credit report. If you miss a payment, if you're not able to make the minimum, you might end up accruing interest charges. I generally just don't recommend using a credit card to finance a really large medical bill."
Kelton instead recommends setting up a payment plan with the healthcare provider.
She points to a couple of advantages.
- Healthcare providers often are willing to negotiate payment schedules and amounts taking the pressure off your budget as you repay the bill.
- It makes the bill medical debt instead of rolling it in to your credit card balance.
"Medical debt has much more protections for your credit report thanks to the CFPB," Kelton said. "You're much less likely to see it affect your credit score in the long run."
As of early January, a new Consumer Financial Protection Bureau rule removed medical debt from most credit reports.
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