Planning to pay medical debt with a credit card? Weigh your options first.

Thinking of paying that big medical bill with a credit card? You may want to think twice.

Paying off medical debt with a credit card can be a bad idea unless you’re trying to earn credit card rewards and can pay the balance in the same billing cycle, says Bruce McClary, a spokesman for the National Foundation for Credit Counseling.

Yet a 2022 study by the Commonwealth Fund found that nearly 40% of underinsured survey respondents took on credit card debt to pay medical bills. Additionally, 37% said they’d depleted their savings to pay medical bills, and 41% said medical debt had a negative impact on their credit rating, as unpaid medical bills could be sent to collections.

Here’s why using a credit card to pay off your medical debt might be a bad idea, along with some tips that may help you eliminate your medical debt sooner.

• Why is paying medical bills with a credit card risky?
• Put your bills under the microscope
• Talk with your provider

Why is paying medical bills with a credit card risky?

How can charging medical debt to your credit card become a potential problem? For one thing, when you pay off a large medical bill with a credit card, you could be moving a debt that is interest-free for some period into one that accrues interest right away.

For example, a $4,000 medical bill on a credit card at 18% interest, with monthly payments of $200 for two years, would cost you around $800 in interest.

You could also have future emergencies that bump up the balance and max out your card. A higher balance raises your credit utilization ratio — a factor often used in calculating your credit scores — which can damage your credit health.

So before you whip out your credit card, see if you can whittle down (or even eliminate) your medical debt.

Put your bills under the microscope

Before paying the bill, figure out how much you really owe.

Make sure to scrutinize your medical bills to search for common errors, including …

• Unnecessary procedures or unused dressings or supplies — Did a doctor order a crash cart for your hospital room that wasn’t used? Maybe a nurse pulled supplies for a procedure that never happened. Look for duplicate charges and go through your bill line by line with the billing department to delete inaccuracies.
• Coding mistakes — Medical fees are based on complicated billing codes, and your chances of figuring them out are slim. Instead, scan for charges that seem especially high, which could indicate incorrect coding, and bring them to the attention of the billing department. You can find the typical prices of medical procedures at FAIR Health’s Consumer Cost Lookup and Healthcare Blue Book.
• Insurance errors — Study your insurance policy to see what’s covered and compare the Explanation of Benefits forms from your insurance company against the medical bills. If you find discrepancies, call your insurance company’s customer service department.

For higher debts, you may want to consider hiring a qualified medical billing or patient advocate to check for errors and negotiate with the hospital. Most advocates charge an average hourly rate ranging from $100 to $200, or 20% to 30% of the amount saved.

Talk with your provider

You may also be able to save money by negotiating with the hospital.
Having a conversation with a provider early in the process to find an affordable payment plan can help a lot, even if it gets to a point later where you can’t continue payments, McClary says.

Be sure to maintain a level tone and talk about the situation rationally. At the same time, don’t let the billing staff pressure you into monthly payments you can’t afford.

Check out these four tips for negotiating.

1. Aim for a win-win. Hospitals and doctors generally take a loss when they send debts to collection agencies. Collection agencies generally charge creditors a percentage ranging anywhere from 15% to 30% of the debt upon successful collection, according to Roger Medlin, membership director of the Tennessee Collectors Association. It’s usually in your and the hospital’s best interest to agree to a figure that saves the hospital the hassle and cost of referring your bill to a third party.
2. Toss out a number. For example, try asking if you can pay $2,000 right now to make your $4,000 bill go away. If the hospital agrees, make sure you get all payment agreements in writing.
3. Ask about charity programs. Hospitals often have programs with funds to assist the uninsured, unemployed and others. Find out if any apply.
4. Challenge unfair billing. If you had a botched surgery or some other bad outcome, speak to a risk manager at the hospital and tell them you don’t want to be billed for the mistake.

Bottom line

While it may be tempting to use your credit cards to pay off medical bills, depending on your circumstances it may be smarter to try to negotiate an interest-free payment plan and chip away at the debt until it’s paid so you can move forward with your financial goals.