Medical debt and the debt snowball
Medical bills often arrive as several small balances from different providers, which suits the snowball well: small debts go first, and each one you clear is one less bill in the mail. But medical debt is different from other debt in ways that matter before you pay a dollar.
Before you pay anything
- Ask for an itemized bill. Check it for duplicate charges, services you didn't get, and claims your insurance should have paid. Appeal a denied claim before paying it yourself.
- Ask about financial assistance. Nonprofit hospitals must have a financial assistance policy, and many other providers offer discounts too. You can often apply after the bill arrives.
- Ask for a payment plan. Many providers offer interest-free plans. Enter the plan's monthly payment as the minimum in your snowball.
Don't trade a 0% bill for interest
A bill from the provider usually charges no interest. Putting it on a credit card or a personal loan turns free debt into expensive debt. Be careful with medical credit cards too: some charge deferred interest, so if the balance isn't fully paid when the promo ends, you owe interest back to the day of the charge.
An example with medical debt
Here's a plan with two interest-free medical bills, a credit card, and $100.00 a month beyond the minimums.
| Debt | Balance | APR | Minimum | Payment as target | Paid off in month |
|---|---|---|---|---|---|
| Urgent care bill | $450.00 | 0% | $50.00 | $150.00 | 3 |
| Credit card | $2,600.00 | 24.99% | $80.00 | $230.00 | 16 |
| Hospital bill | $3,200.00 | 0% | $100.00 | $330.00 | 21 |
Everything is paid off in 1 year 9 months, with $531.75 in interest. Paying only the minimums on the same debts takes 4 years 7 months and costs $1,784.39 in interest.
Open the medical debt example in the calculator
Snowball or avalanche with 0% bills?
The avalanche pays the highest rate first, so it leaves 0% bills for last. In this example it saves $35.32 in interest and finishes in the same month, but the first bill is gone in month 9 instead of month 3. The snowball gets you a first win 6 months sooner for that price. Either is a good plan; the comparison guide helps you choose.
If a bill is in collections
You can ask a debt collector to verify the debt before you pay, and you should get any agreement in writing. Rules about medical debt on credit reports have changed several times in recent years, so rather than rely on one, check your reports for free at AnnualCreditReport.com and dispute anything that's wrong.
Try it with your own numbers
Enter each bill with a 0% rate and the payment you've agreed to, along with everything else you owe. Build your plan in about a minute.