How to Finance a Medical Emergency

An OppLoans E-Book

OppLoans: Paying medical debt with a credit card

Paying medical debt with a credit card.

In order to avoid taking out a high-interest loan from a predatory lender, you may feel compelled to use a credit card to finance a medical emergency. However, you still need to be careful. While most credit cards offer much lower interest rates than predatory lenders, credit card interest can still accumulate quickly, worsen your financial state, and eventually lower your credit score. Rob Berger, a contributor to Forbes, compared credit card usage to heroin because “they are both extremely dangerous and addictive.” 32 Rather than maxing out your credit card, consider applying for a safe installment loan to cover your medical debt.

Using personal installment loans to pay medical debt.

Predatory lenders are bad, that much is clear. But if you find yourself without savings or family to fall back on, what are you supposed to do about that emergency surgery? How are you going to pay to fix your son’s broken leg?

Here’s the good news: you don’t have to fall victim to predatory lenders. No, not even if you have a short-term medical crisis.

If you have good credit, you have you a number of options. You may qualify for personal loan from a bank, or a personal line of credit from a credit union. 33 These will typically have low APRs, which are sometimes even lower than credit cards. 34

If your credit’s not so hot, you might look for a safe personal installment loan from a loan company. Installment loans are paid back in fixed increments, typically monthly, over a set period of time.

This might sound a little like those troublesome no-credit-check loans we mentioned earlier. But most lenders who offer personal installment loans are a lot more careful than the no-credit-check guys. Your credit history will be scrutinized, and you’ll need to provide information about your income before you’re approved for a loan. Plus, they won’t push you to borrow more than you can really afford. APRs for these kinds of loans can vary, so you should shop around to make sure you’re getting the best possible rate.

Play your cards right, and taking out an installment loan could actually improve your credit score. If you make payments on time, your lender will report that information to the bureaus that calculate your credit score. Just six months of prompt payments on an installment loan could lead to a 35-point credit score increase. 35

If you’re a member of the military, you can also apply for emergency financial assistance through a service relief organization. Note that if you’re an active-duty service member, you are entitled to special protections under the Military Lending Act (MLA). Under this law, lenders can’t charge you APRs higher than 36 percent on most loans. The MLA also prohibits prepayment penalties. 36

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