If You Have Medical Debt, Don’t Make This Costly Mistake

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Medical debt accounts for a huge percentage of all debt held by individuals in the United States. It’s the most common debt reported on consumer credit reports, according to the Consumer Financial Protection Bureau. And the problem seems unlikely to get better any time soon.

Medical debt is not a discretionary or impulse expense. It’s often literally for life-saving care. And for those who are without health insurance, these expenses add up very quickly.

If you find yourself in a position where medical bills are piling up, I am going to share some tips for dealing with it. Specifically, I want to help you avoid one particular costly mistake that many people make that makes their medical debt problem so much worse.

The Mistake to NEVER Make

No matter how much medical debt you owe, here is the one thing that I warn against: do NOT pay these debts with credit cards.

When you feel like you’re drowning in medical debt, it can feel like using a credit card is the only way to relieve some of the pressure. You can at least move the payment elsewhere, push out some due dates, and not have your credit hit as hard with delinquencies.

But it’s a trap.

This short-term relief can come with a tremendous amount of added difficulty. Let’s discuss why that is, including a specific example that a client of mine has dealt with.

How Paying Medical Debt with Credit Cards Makes the Problem Worse

Medical debts tend to have fairly low interest rates—often in the single digits. But credit card interest rates tend to be much higher. Even a “good” interest rate may be double what a standard interest rate is on a hospital or doctor bill.

On top of the higher interest rate, credit card companies charge higher late fees and penalties than medical providers usually do. They are also much more aggressive in their collection practices than medical providers tend to be.

So there’s at least a double hit with higher interest rates and more aggressive collections tactics. What does it look like in practice? Let’s consider a real situation one of my clients dealt with.

The Tragedy of Converting Medical Bills to Credit Card Bills

This client came to me in early 2020 with a lot of debt, about $180,000 (not counting their house). Most of this balance consisted of unsecured credit card debt and personal loans.

As I met with them in our Discovery Session, I asked how they managed to gather so much credit card debt.

What happened was that the wife had several hospitalizations and was unable to work for about 6 months. They also did not have health insurance at the time. This meant all of these bills had to be paid out of pocket.

As they piled up, this couple paid the bills with credit cards. The bills continued to mount, and they opened new cards to keep things current. At one point, they even started paying household bills with credit cards, too.

Before they knew it, the total non-mortgage debt was $180,000 and their monthly minimum payments were nearly $15,000. And their household income was barely half of that monthly.

How did this happen?

Medical debts became credit card balances. Those balances were not fully paid at the end of each statement cycle. Interest compounded. Late fees began to pile on. Collections calls began to come in.

And at a certain point, the lawsuits started.

Thankfully, we were able to get these settled and there was no need to file for bankruptcy. But this was a hard lesson for them about the consequences of converting medical debts into credit card debt.

What Are the Alternatives?

While using credit cards to pay medical debts is a serious hazard, we still have to pay these medical bills somehow. The cash may not be available immediately to cover these bills. But that does not mean you don’t have options to soften the impact.

So let’s consider what the other options are that minimize risk to your finances.


The first thing to do is actively communicate with the provider’s billing department. This requires voluntarily confronting a scary situation. But things won’t get better by ignoring what’s going on.

By communicating with them and acknowledging your responsibility to pay, you’re more likely to get some flexibility on their end. Ask what their payment options are and see what programs they may have to assist you.

And remember to be as polite and respectful as possible, in spite of how you may feel inside about your medical debt. As the old saying goes, you’re more likely to attract bees with honey than with vinegar.

Find a Patient Advocate

After you’ve begun to communicate with the billing department, ask if the provider has a patient advocate on staff. Nonprofit medical providers usually need to have someone to provide assistance in these situations due to requirements in the tax code.

The advocate helps to reduce what you owe by acting as an intermediary between you and the billing department. Billing usually will not negotiate directly with you on the amount owed. But the advocate can do that and reduce your out-of-pocket responsibility.

If the provider does not have a patient advocate on staff, it may be a good idea to search online for someone who does this. While there may be a fee to pay the advocate, if they do their job well, the total owed will end up being lower.

In essence, a patient advocate can basically pay for him or herself with what they save you on your medical debt.

Pay At Least Something

Even if you’re unable to pay the minimum required, try to at least pay something as a gesture of good faith. In your communications with the billing department, ask about payment plans.

If you are in a hard financial situation, state what you can do each month and ask that they accept it until you can add more to your monthly payments. And if you’re able to afford something, even if it’s just $25 or $50 a month, make that payment.

While the required payment may be higher, you are at least showing the provider that you’re trying. And if you show effort on your end, they are more willing to work with you.

Technically if you are behind on payments, the provider can send your account to collections. But by at least paying something, even just a little bit, the likelihood of that is greatly reduced in my experience.

Final Thoughts on Paying Off Medical Debt

Dealing with medical bills piled sky-high is a hard place to be. But it won’t last forever. There are ways to come out from under this weight into financial freedom.

It requires hard work and confronting a scary situation. You may still need further care and more bills may be coming down the road. But you’ll be able to take care of this.

That said, I do not advise compromising your health and foregoing necessary care. See what alternatives you have to get discounts or more affordable care options. If you have a prescription, see if you can have a generic instead of a name brand to save big time.

Ensure too that all your bills are itemized and that what your bill encompasses is what you actually received. If your bills list things you didn’t use, dispute it with the provider and have it corrected.

And also check your health insurance coverage to ensure that your plan covers the care you receive to the greatest extent possible. If you find yourself trapped in medical debt, or any other type of debt, there is hope for a brighter future.

Reach out to me to discuss how I can walk with you on your financial journey and emerge victorious. Book your free Discovery Session today!

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