Submitted by Rachel R on Mon, 06/04/2018 - 10:11am
Avoid using credit cards to pay medical bills
Image by sasint via Pixabay
Even with health coverage from your employer or through the Affordable Care Act exchange, Greensboro consumers might find medical bills overwhelming. Hefty deductibles, coinsurance, and copays can add up, and if you don’t have health insurance, even a minor medical issue can result in severe financial hardship. When the medical provider or debt collector comes calling, it may be tempting to settle your debt with plastic, but here is why that’s the last thing you should do.
While credit bureaus must now wait a minimum of 180 days before adding a medical debt on your credit report, credit cards are almost immediate. Credit card issuers report activity every month.
Doctors and other providers won’t report you for a few months after the service was rendered and even then, the three credit bureaus won’t allow it on your record for at least six months. You can take that time to work out a payment plan or arrangements.
Most medical providers will let you make payments or give you time to force your insurance company to pay up if it’s a covered expense. The worst thing to do is swipe plastic for a bill your insurer should cover then hope they reimburse you.
For Greensboro consumers who need extra time to pay a medical bill, the provider will usually let you set up a payment plan with no interest or just a small fee. In fact, they might lower the amount due and set you up on a payment plan if you have no insurance.
However, once you swipe your plastic, you’ll see interest charges begin to accrue on the balance within a few weeks. That can pile on added fees to medical bills and lead to a spiraling debt quandary.
You’ll get more time to pay on the debt when you put it on a credit card, but that comes at a higher cost than if you’d worked out terms with the medical provider.
Even if a medical bill doesn’t max out your credit card, just loading it on there can drop your credit score. Greensboro consumers should know that credit utilization is a major factor in your credit score.
Utilization is how much of your credit line you’re using. When you go over 25-30% of your total available line, your credit score begins to suffer. No doubt your doctors and other providers will encourage you to charge what you owe, but it can hurt you.
Once your credit score dips because of utilization, other negative consequences might crop up as well. Your credit card companies may raise your interest rates if your credit score drops and it’s a slippery slope to more problems.
When you have insurance coverage, you expect them to cover what’s promised. But if you cave in and pay the bill instead of pushing on the carrier, you might never get your money back. Once an insurer knows the bill is paid, there’s no pressure to do the right thing.
While a medical provider may hassle you to pay a portion (or all) of a bill that’s the responsibility of your carrier, that’s not usually the best approach. Instead of swiping your card, save your money and credit rating and pressure your insurer to cough up the money.
For medical expenses, there are many more affordable options than paying with plastic. First, if you’re uninsured or under-insured, the medical provider may drastically reduce the amount you owe. Second, you can get low (or no) interest payments.
If you’re making payments and chipping away at it, they may not report you to the credit bureaus. You can usually make partial payments that will be accepted without penalties. Plus, even if the provider reports you to the bureaus, it may not impact your score much.
The latest credit scoring models put less weight on medical debt than on credit cards and other debts. Finally, if you decide to pursue an option like Greensboro bankruptcy, medical bills can be 100% discharged with Chapter 7 and greatly reduced in Chapter 13 bankruptcy.
To find out more about the life-changing debt relief offered by North Carolina bankruptcy, contact the Law Offices of John T. Orcutt. Read reviews from satisfied clients then call +1-833-627-0115 to schedule a free Greensboro bankruptcy consultation at one of our locations in Raleigh, Durham, Fayetteville, Wilson, Greensboro, Garner or Wilmington.
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