Tags: medical bills

3 Funding Options for Unforeseen Medical Bills

a dollar bill bursting open with medical bills underneath

By Wednesday, 20 January 2021 03:43 PM Current | Bio | Archive

Medical bills often come as a surprise, even when you've budgeted well and saved an emergency fund.

Whether it's the cost of a planned procedure or emergency care, even if you have insurance the costs can add up and quickly become overwhelming. In fact, 66.5% of bankruptcies are due to medical reasons.

If you're in a position where you need to pay large medical bills and don't know how you'll cover the expense, you do have options. Dealing with a medical emergency and financial stress can be overwhelming, but by looking at the advantages and disadvantages of all your choices, the best decision for you can become increasingly clear.

1. Personal loan

Surviving an emergency or prolonged illness can leave many Americans with a lifelong financial burden. More than 50% of cancer survivors report financial hardship as a result of their treatment. To overcome this challenge, many people opt to take out personal loans to cover their medical debt.

Depending on the interest rate you get approved for, using a personal loan to cover your medical debt could be the cheapest way to pay your bills, especially if your debt is incurring late fees.

When you take out a personal loan to pay your medical bills, you can simplify your finances. Instead of focusing on multiple bills and payments, you'll now just have one monthly bill. You can make set payments for the duration of the loan. If you keep up with your regular monthly payments, you'll be out of debt within the term of the loan.


  • For prime borrowers, average APR offers can be low (approximately 7.63% for borrowers with a credit score of 720 or higher)
  • Avoid collections
  • Simplify your finances
  • Monthly payments, a fixed APR and a set term can give you clarity into how much you owe


  • You'll need to start making loan payments immediately after taking out the loan, while some medical offices could offer deferment
  • Subprime borrowers could have difficulty getting a favorable interest rate
  • You might borrow more than you can reasonably repay
  • There could be additional fees such as an origination fee or a prepayment penalty

2. Credit card

You don't want to leave your medical bills unpaid for too long — after about 180 days, they could start to impact your credit score. Depending on the size of your medical debt, a credit card could be a particularly savvy way to pay off your debt before it goes to collections.

If you're opting to use a credit card for your medical bills, one smart option is to open a new card with a 0% APR introductory offer. With this type of offer, you won't owe any interest until the end of the introductory period — which usually lasts between 12 and 18 months. If you know you can repay your bills in that time period, this could be the cheapest method for covering your medical costs.

 Keep in mind, however, that after the introductory period, the APR can rise significantly — sometimes more than 20%. If you haven't repaid the balance, you'll owe interest on your purchases, usually from the date they were made. This can get expensive, fast.


  • Using a 0% APR card could be the cheapest way to pay your medical bills now
  • Could receive cash back or reward benefits


  • Could pay interest on top of medical bills if funds are not repaid within the introductory period
  • Might not qualify for the lowest rates or for the 0% APR introductory period

3. Home equity line of credit

If you have substantial equity built up in your home, you can consider a home equity line of credit (HELOC), which uses your home as collateral to get you access to funds now. Getting access to your HELOC is usually a straightforward process. Since it's secured debt, you won't need a co-signer to obtain it, even if you have bad credit.

Using your HELOC is also easy; it's similar to using a credit or debit card. However, keep in mind that a HELOC is revolving credit, which is sometimes difficult for people to repay since you don't have a set term or consistent payments.


  • Usually quick approvals process
  • Bad credit is usually less of an issue
  • Could be lower interest rates than personal loans or credit cards


  • Your home is used as collateral, which means that not repaying your HELOC could lead to foreclosure
  • Your limit could change depending on fluctuations in the value of your home
  • Could be hard to repay because there is no set term
  • Could be easy to overspend even if the full limit of the HELOC is not needed to cover all medical bills

Choosing a strategy

Remember, you're not alone when it comes to medical debt. According to a survey, 79 million Americans have problems with medical bills. Even though it might feel overwhelming to struggle with medical debt, if you've learned anything it should be that you do have choices.

Choosing the best strategy for you will largely depend on what you feel most confident repaying — either installment debt or revolving debt. You'll also want to evaluate each method to determine where you'll get the lowest interest rate. Be sure to factor in any associated fees when you do so.

Whether you decide on a personal loan, a credit card, a HELOC or a different strategy, there are many ways to approach your medical bills that can help you repay them within a reasonable time frame.

Jolene Latimer has her master's in Specialized Journalism from the University of Southern California. She writes about personal finance, marketing and sports.

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Medical bills often come as a surprise, even when you've budgeted well and saved an emergency fund.
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Wednesday, 20 January 2021 03:43 PM
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