How to use a credit card to cover health expenses

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Liliana Hall

Published on September 01, 2022 | 7 min read

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Man checking out his wife from the hospital

Medical bills can be some of the biggest expenses most Americans ever face, which is why many people turn to credit cards for medical bills. If you can’t cover medical expenses out of pocket, should you put them on a credit card?

While using credit cards for medical expenses can help you cover a surprise medical bill, high interest rates could end up pushing you into debt. It’s a good idea to consider all of your options before paying your hospital bill with a credit card since combining big medical bills and credit could cost you a lot of money in the long run.

One of those options is to use a credit card with a 0 percent intro APR rate, which will give you a period of time to pay off your medical bill before it starts accruing interest. If you already have medical debt on a high-interest credit card, a balance transfer could help you save money as you pay off your bills.

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 a medical credit card or not.

Using a credit card to cover medical expenses

Can you pay a hospital bill with a credit card? Yes. Should you? It depends. Using credit cards for medical expenses can help you out in a pinch, but combining medical bills and credit could increase your credit card balances, lower your credit score and saddle you with credit card debt that might be difficult to pay down.

When it may make sense to pay medical bills with a credit card

If you know you won’t have to pay interest. If you want to use a credit card for medical bills, your best choice is to sign up for a 0 percent intro APR credit card. These credit cards offer temporary zero-interest periods that often last for over a year, giving you time to pay off your medical debt before it starts accruing interest. Applying for a zero-interest credit card and using that credit card for medical expenses is the best way to put medical bills on credit. Here are our picks for the best 0 percent interest credit cards.

If you want to earn rewards (and have the funds). Rewards credit cards let you earn points, miles or cash back on everyday purchases. If you are expecting a large medical bill in the future, or even if it is unexpected, you might as well use it as an opportunity to earn some points. However, this won’t work effectively if you don’t already have the money on hand to pay off your credit card at the end of the billing cycle. Racking up a large medical bill on your credit card for a few extra points won’t actually be worth it if you have to pay high interest on a large balance.

If it’s for the sake of convenience. Credit cards can come in handy when you have a medical bill that needs to be covered. Instead of throwing it on your debit card, consider using a credit card as they are one of the safest ways to pay for purchases — especially over the phone or online.

Why you may want to avoid paying medical bills with a credit card

If you have a high interest rate. Putting medical bills on a high-interest credit card, on the other hand, is asking for trouble. Credit card interest compounds, which means that carrying a high balance on a high-interest card could add a lot of extra money to your debt. If you have to use a high-interest credit card for medical expenses, apply for a balance transfer credit card as soon as possible.
If it’s going to max out your credit card. Maxing out your credit card is never good for your credit score. When your credit card balance is high in relation to your total line of credit, your credit utilization increases. If you are charging a $2,500 medical bill to a card with a $2,500 limit, your credit utilization will reach 100 percent (assuming you don’t have an existing balance on the card). Carrying a high balance for a short period of time most likely won’t result in long term damage to your credit, but it is important to pay off your balance in full at the end of the month if this is the case.
If you have other options. Let’s face it, there are better financing options for taking care of medical bills. But the risk you take when you put a large medical bill on a credit card is high. Consider a personal loan or negotiating a long-term payment plan with the medical provider. You always have options, you just have to ask.

How medical debt affects your credit

Medical debt is just like any other kind of debt — if you don’t manage the debt responsibly, it can damage your credit history and lower your credit score. If you pay your hospital bill with a credit card, your debt becomes part of your credit history.

Since your medical bills are added to your credit card balance, they can affect your debt-to-credit ratio and potentially lower your credit score by reducing your available credit. Your credit card payment history will also affect your credit score, so keep that in mind before you use a credit card for medical bills. If you start missing credit card payments due to medical debt, your credit score could take a serious hit.

The same rules apply if you use a medical loan or a personal loan to pay off your medical bills. The debt will appear on your credit report and could have either a positive or a negative effect on your credit score depending on how it affects your credit mix, available credit, payment history and so on.

What if you don’t put your hospital bill on credit and decide to work out a payment plan with the hospital instead? Many people don’t realize that medical providers don’t report medical debt to the three major credit bureaus. If you negotiate with a hospital to pay off medical debt in installments, the hospital does not report your payment plan to Experian, Equifax and TransUnion. Your medical debt does not affect your debt-to-credit ratio. On the flip side, your on-time payments also aren’t included in your credit report as proof of positive payment history.

That said, if you fall behind on your medical payments and the hospital sells your debt to a collection agency, your unpaid debt could turn into a derogatory mark on your credit report. According to Experian, all three credit bureaus offer consumers a 180-day waiting period to resolve unpaid medical debt before the collection account will appear on your credit report. This gives you a chance to pay off your debt or negotiate a settlement — so do your best to resolve your unpaid debt before it has the chance to damage your credit.

What about medical credit cards?

Should you use a medical credit card like CareCredit to pay your hospital bills? Well, you should read the fine print before you enroll. Some medical credit cards offer deferred interest plans, which allow you to defer the interest on your medical bills for a limited period of time.

Unfortunately, many people don’t realize that once the deferred interest period ends, the credit issuer will charge back interest from the date of the charge on any balance remaining on the account.

If you don’t pay off your medical bills in full before your deferred interest period runs out, you could end up owing a lot more interest than you were anticipating — especially because medical credit cards often charge higher interest rates than today’s best credit cards.

Alternatives for paying for unexpected medical expenses

If you find yourself facing unexpected medical expenses, it’s important to consider your options. Some people can pay unexpected medical bills with their emergency fund, but many find themselves in a position where they have to pay their hospital bills with a credit card.

If you don’t want to use a credit card for medical bills, here are some other ways to cover an unexpected medical expense:

Negotiate a payment plan. Many hospitals and medical providers will work with you to create a payment plan that you can afford. Instead of paying off your medical bill in a lump sum, you’ll pay it off in installments.
Take out a medical loan. Medical loans are designed to help people cover both unexpected and elective medical expenses and may offer lower interest rates than credit cards — especially if you have good credit.
Take out a personal loan. Like medical loans, personal loans often come with lower interest rates than credit cards, which means you could save money on interest charges.
Borrow money from family or friends. According to a 2019 Bankrate survey, 60 percent of Americans have lent cash to help out a loved one. You might have people in your life willing to help you out of a tight spot if you let them in on your situation.
Try crowdfunding. Many people use platforms like GoFundMe to help cover unexpected medical expenses. Just keep in mind that you might not be able to crowdfund the full amount of your medical bills.

The bottom line

Even though many of the top credit cards for medical expenses offer rewards, don’t let the allure of earning cash or points for your purchases cause you to charge more than you can afford. Paying off credit card balances, even with a 0 percent intro APR rate, can be difficult enough without adding new balances every month. If you’re going to use a credit card for medical expenses, use it wisely — and try to get those medical bills on credit paid off as quickly as possible.