It's best to pay off credit card debt first. Even when medical debt comes with interest, credit card interest rates tend to be much higher. Below, Zamosky and financial educator Thomas Nitzsche of Money Management International, Inc (a 501 (c) organization (a nonprofit member of the National Credit Counseling Foundation) share the three things you should consider before charging your credit card for medical expenses. As long as you pay the full balance of your medical bill within the first 15 months of opening your card account, you can save on interest while still getting a cash refund.
This card would only make sense if you can confidently pay your entire medical balance during the initial 15-month period with 0% interest; otherwise, we don't recommend it. If you need to finance a medical bill, there are usually better options available than your credit card account. Sure, taking out a credit card may be the most convenient solution, but the cost (both financially and credit-rating) is high if this approach is adopted. Instead of paying with a credit card, you may want to consider an alternative financing option.
Depending on the bank's situation and policy, the bank may not credit your account for the fraudulent charge until the investigation is complete. According to Experian, the three credit bureaus offer consumers a 180-day waiting period to resolve unpaid medical debts before the collection account appears on their credit report. It's a good idea to consider all options before paying your hospital bill with a credit card, since combining large medical bills and credit could cost you a lot of money in the long run. One such option is to use a credit card with an initial APR rate of 0 percent, which will give you a period of time to pay your medical bill before you start accruing interest.
If you have credit cards with rewards or if you don't have the best credit score, it's not unusual for your credit card's APR to be higher than the national average. At the same time, look for billing errors in your medical bills, or at least try to negotiate the amount with the care provider's billing office. When you ask for a discount on your bill, keep in mind that medical providers tend to offer more flexibility when it comes to your debts than traditional credit card lenders. Piling up a big medical bill on your credit card to get some extra points won't be worth it if you have to pay high interest on a large balance.
Using credit cards for medical expenses can help you in a hurry, but combining medical bills and credit could increase your credit card balances, lower your credit score, and burden you with credit card debts that could be difficult to pay. Although many of the best credit cards for medical expenses offer rewards, don't let the lure of earning money or points for your purchases cause you to charge more than you can afford. Here's what you need to know about using credit cards for medical expenses, including how medical bills affect your credit and whether you should consider getting a medical credit card or not. Because credit card accounts have interest-free grace periods, some people use their card as a short-term loan.
That said, if you fall behind on your medical payments and the hospital sells your debt to a collection agency, your unpaid debt could become a derogatory mark on your credit report.