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. Before paying a medical bill with a credit card, first exhaust all other possibilities of reducing or refunding the balance, Nitzsche tells Select. 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. Visit the Office of the Insurance Commissioner's website for more information on what to do if you receive a surprise medical bill. For example, if you get care from a provider that you know your plan doesn't cover, you wouldn't be surprised to get a bill for their services, in addition to what your plan covers.
As long as you pay the full balance of the statement before the due date, you can avoid paying interest on your charges, including medical bills. Tenants: If you don't pay your rent on time, your landlord can evict you even if you have a good reason not to pay. It is estimated that up to 80% of medical bills contain some kind of error, so read any medical bill carefully before paying anything. This calculates the amount of available credit you use, and the less you use, the better your score will be.
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. The debt will appear on your credit report and could have a positive or negative effect on your credit score, depending on how it affects your credit mix, available credit, payment history, etc. Instead of including it on your debit card, consider using a credit card, as it is one of the safest ways to pay for purchases, especially by phone or online. While using credit cards for medical expenses can help you cover an unexpected medical bill, high interest rates could end up driving you into debt.
Personal loans are also installment accounts rather than revolving accounts, such as credit cards, meaning they won't affect your revolving utilization ratio. I told Lew Sichelman of Market Watch that it's better to have your credit report with outstanding medical bills than to run out of credit cards. A recent study led by Raymond Kluender, from Harvard Business School, found that about 18% of Americans are collecting medical debts. If you have hospital bills because you went to the emergency room or had to be admitted to the hospital, you may be eligible for charitable assistance.