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Should I Use a 0 Percent Balance Transfer Card for Medical Bills?

Dec. 19, 2014
Balance Transfer Credit Cards, Credit Card Basics, Credit Cards
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A zero balance transfer credit card can help pull you out of credit card debt, but using it for medical bills is a last ditch, end-of-the-line solution for debt consolidation.

A credit card balance transfer is the movement of a balance on a high-interest credit card to another credit card that has more favorable terms. Many balance transfer credit card offers include a limited time 0% APR with a percentage fee for each transfer you make. If you can pay off your debt within the time period of 0% APR, then you’ll save a bundle on interest charges over the life of your credit card debt.

Medical bankruptcy accounts for the majority of personal bankruptcies, NerdWallet found. Medical bills, like credit card debt, are some of the most expensive types of debt to carry. But, you shouldn’t use credit cards for your medical bills.

Other debt consolidation options to consider include a personal loan from a bank or credit union; a home equity loan or home equity line of credit (HELOC); or a peer-to-peer loan from sites like Lending Club or Prosper. Choosing the best debt consolidation option will depend on the kind of interest rate you can find, the terms of repayment or promotion, the monthly payment amount and other factors.

If you’re having trouble paying your medical bills, you may be able to find assistance through the government Medicaid and Medicare Savings Program. If you’re still overwhelmed or can’t dig yourself out, you may want to look into finding a medical billing advocate to negotiate hospital bills on your behalf.

» MORE: How to pay off debt

Essentially, you need to do anything you can to keep your bills out of collections so they don’t ruin your credit. If you’ve exhausted all other debt reduction methods and you have no other options, or if your medical debt is on it’s way to a collections agency, then using a 0% APR balance transfer credit card would be your best bet.

Medical bills generally don’t generate interest until they go to a collections agency. So if you use a 0% balance transfer credit card to pay your medical bills, you wouldn’t be saving any interest as you would with regular credit card debt. If you do need to pay your medical bills with a 0% balance transfer credit card, it’s critical that you can pay down your medical bills within the time period of the 0% APR promotion. Otherwise, after six months or a year, you’ll end up with a new interest rate to pay on the credit card and the same amount of debt.

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