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Paying Medical Bills with Credit Cards – Good Idea?

by on April 30, 2009

It is becoming more and more common for people with high medical bills to pay for them with credit cards.  Some consumers who are very good at handling their debts and credit cards can do this, but they are in the minority.  This practice of paying medical bills with credit cards is a sign of desperation for the rest of consumers who are already struggling to keep up with expenses overall.

Why not?  Let us discuss high interest rates, over-limit fees, annual fees, and the general overall headache that credit cards have become.  Unless you are good at paying off your balance every month, then this is not a good idea.  Even if you are planning to pay it off over a few months, you had better figure in the interest charges and other fees that will hit as well.  Otherwise, avoid this like the plague.

What could happen?  If you place these charges on your card, you could run up against your credit limit which will start a domino effect of charges and red flag events with your credit card issuer.  They might reduce your credit limit down near your balance

What are the alternatives?  First, understand that making payments to a medical facility or doctor’s office is a lot better and cheaper than going the credit card route.    Most physician offices have policies that require payments at the time service is rendered, but the truth is that most of these offices have many, many patients with open account balances that they have to work with on a daily basis.

Find a loan.  You might be successful in finding a loan from a local credit union for medical bills.  These financial institutions are more opened to making these types of loans and they often have better rates than even your local bank, so they would be a good option to try.

Realities about Health Care Costs:

•    Price and quality go together.  Just like any other purchase, you get what you pay for in the way of quality care.  There have been ads recently touting overseas medical procedures because they cost so much less.  And it does seem like it might be worth a look because many of the world’s best surgeons have been educated in the United States.  But that is not the prime consideration.  The hospital conditions are different and might not be up to the same quality standards that we have here.
•    Cost and coverage goes hand-in-hand.  The coverage that you can afford might not be the coverage that you need.  Unfortunately this is the case for many people because health care costs are still spiraling upward.  Keep in mind that you might have to look for supplemental insurance in order to fill out your portfolio of health care coverage.  You will find that deductibles have increased and that the out-of-pocket costs have gone up too.
•    True costs consider all parts of a medical bill.  When you have a procedure or surgery, then you will have multiple bills from all of the entities that were involved: the doctor, the anesthesiologist, the hospital, etc.  These will all be submitted to your insurance provider who might have different agreements with all three for payment.  It can be confusing.

Credit cards are great financial tools when used correctly.  That means that they would be good to use for medical bills if you use them responsibly as mentioned before.  But as a general practice, they are not the best alternative.  Try to exhaust your other options before deciding to use your credit card in this manner.  You will be glad that you did.

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