Paying medical bills with a credit card shouldn’t always be your first choice, but in some cases, it may be a decent option.

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When the hospital or doctor’s office billing department sends multiple past-due notices and threatens to send your account to collections, it’s time to come up with a treatment plan for taking care of those medical bills fast. Otherwise, your credit rating prognosis could be grim.

That’s because if the hospital or health care provider sends your account to collections, your credit rating will likely take a hit since collection accounts on your credit report typically lower your credit score. Paying a large medical bill with a credit card might seem like a fast way out of a bad situation. Be careful, however.

Paying medical debt with a credit card could put you in an equally bad scenario, one where you have too much credit card debt and pay interest on that charged medical bill for months or years. In certain cases, though, paying off medical debt with plastic could work in your favor.

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1. You don’t have enough cash

You don’t have enough cash

When you can’t afford to pay a medical bill right away, you still need to protect your credit score by keeping the account out of collections. In this case, paying with a credit card stops the stressful calls with the billing department and avoids collections.

However, you’re typically moving the debt from a no-interest account to one where you could pay a high-interest rate. A better option may be working out a payment plan with the billing office instead.

Find out: How to Deal With Medical Debt in Collections

2. The bill is relatively small

Do you really want to risk that pesky $400 debt hurting your payment history if it’s sent to collections? Charging the bill to your credit card could be a decent option, but only if you have a solid plan to pay the amount off soon to minimize interest payments.

Find out: 8 Strategies for Dealing With the Hospital Billing Department

3. You use a card with a 0% APR

You use a card with a 0% APR

If you must pay a medical bill with a credit card and have good to excellent credit, consider applying for a new credit card that has a 0% interest rate for a year or longer. That way, the bill is safely out of immediate credit-damaging territory, and you won’t pay extra due to a high-interest rate.

Be careful, though. Create a budget to pay the debt off before the promotional period ends, or you could pay more in the long run when the interest rate jumps.

Find out: 7 Hazards of a 0% Interest Offer and How to Avoid Them

4. You pay off the bill with a credit card that has a sign-up bonus

If you’re good at managing credit card debt and have good to excellent credit, another option could be applying for a credit card that offers a sign-up bonus once you spend a certain amount. For example, a bonus of $200 if you spend $1,500 within 90 days after opening the account.

If you know you can pay the balance off soon, you can use the sign-up bonus to pay a lower amount on the bill. While you’re at it, choose a card with a 0% interest rate for a year or longer. Then make sure you pay off the balance before the promotional period ends to avoid paying more interest than the amount you received as a sign-up bonus.

5. You can negotiate a lower lump sum settlement

You can negotiate a lower lump sum settlement

What if you ask the billing department if you can settle your $2,500 debt today with a reasonable lump sum credit card payment – $2,000 or $1,800, for example? That person you’ve been arguing with for months may jump at the chance to permanently file away you and your account.

Proceed with caution, however. Make sure you create a plan to pay the credit card debt off as soon as possible and stick to your goal to minimize interest payments.

Find out: Everything You Need to Know About Medical Debt Settlement

6. You have no other credit card debt

If you already have a lot of credit card debt, charging one more big bill isn’t the best idea. However, if you’ve been diligent about not carrying a balance on your credit cards, and you know you can pay the balance off in a few months, charging a medical bill to a credit card could be a better option than the bill going to collections and hurting your credit score.

7. Your credit utilization rate is low

Your credit utilization rate is low

Charging a large medical bill to your credit card isn’t a smart move if your credit utilization rate – the ratio of overall revolving credit debt to your available credit – is already high. That’s because your credit utilization rate accounts for around 30% of your credit score, and keeping your credit utilization rate lower than 30% is better for your credit score.

So, even if you keep your account out of collections by paying with a credit card, you might still lower your credit score by utilizing too much of your available credit.

Make sure your credit utilization rate is well under 30% before paying a large medical bill with a credit card. Also, do your best to pay off the balance quickly and use a 0% APR credit card if you can.

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About the Author

Deb Hipp

Deb Hipp

Deb Hipp is a full-time freelance writer based in Kansas City, Mo. Deb went from being unable to get approved for a credit card or loan 20 years ago to having excellent credit today and becoming a homeowner. Deb learned her lessons about money the hard way. Now she wants to share them to help you pay down debt, fix your credit and quit being broke all the time. Deb's personal finance and credit articles have been published at Credit Karma and The Huffington Post.

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