How This Special Credit Card Could Help You Pay for Out-of-Pocket Healthcare Costs

Even if you have "good" health insurance, you still might end up paying money for out-of-pocket healthcare costs like co-pays, deductibles, lab fees, or other services not 100% covered by your health plan. According to the Peterson-KFF Health System Tracker, as of 2021, the average American spends $1,315 per year on out-of-pocket healthcare. That's about $110 per month!

If you qualify for a health savings account (HSA), this can be a great way to pay for healthcare costs while getting an extra tax deduction. But not everyone can use an HSA -- you need the right kind of high-deductible health plan. If your deductible is too low, or too high, or if you have some other kind of insurance that doesn't qualify for an HSA, you'll need to find another way to pay for your out-of-pocket healthcare costs -- without the tax benefits.

Let's look at another option to cover your healthcare costs in 2024 that won't get you a tax deduction but can still save you money: a 0% APR credit card.

What is a 0% APR credit card?

If your credit score is good enough to qualify, you can apply for credit cards that charge 0% APR for a certain introductory period. The best 0% APR credit cards charge no interest on purchases for up to 21 months or 21 billing cycles from opening your new account. This means you could use the card to pay for a medical bill, and you'd have up to 21 months (or billing cycles) to pay off that debt, interest-free.

Some of these cards also offer cash back or other rewards on everyday purchases. For example, the Wells Fargo Active Cash® Card (see rates and fees) offers a few valuable benefits that could make it a great choice for paying for out-of-pocket healthcare costs:

• 0% intro APR, 15 months from account opening on qualifying balance transfers; after the intro period, the go-to 20.24%, 25.24%, or 29.99% Variable APR applies.
• Unlimited 2% cash rewards on all purchases (no category requirements)
• Earn a $200 cash rewards bonus after spending $500 in purchases in the first 3 months.
• $0 annual fee

Unlike many rewards credit cards, the Wells Fargo Active Cash® Card doesn't have any category restrictions for how to earn your benefits. These features could make this card a great fit for healthcare spending.

How to use a 0% APR credit card for healthcare

Let's say you have a $1,500 medical bill. You apply and get approved for a new credit card with 0% introductory APR for 15 months, and you use this new credit card to pay your healthcare clinic bill. You now have a credit card balance of $1,500.

But let's say that this card gives you a $200 cash rewards bonus for spending more than $500 within the first 3 months. And you'll earn 2% cash rewards for that $1,500 purchase -- or $30 of rewards. So after counting your cash rewards bonus ($200) plus cash rewards for the initial cost of the medical bill ($30), you now have 15 months to pay off the remaining debt ($1,270) at 0% interest. That means a monthly payment of about $84.67.

What if you have an even bigger healthcare bill? Let's say you have a child who needs braces, which aren't covered by your dental plan, and the full cost will be $7,000. Some orthodontists will give you a big discount if you pay for the full cost of treatment in advance as a one-time payment. Let's say you can save $1,000 by doing this; that leaves you with $6,000 of one-time out-of-pocket costs.

Some of the best 0% APR credit cards give you an extra-long time to pay off your balance without charging interest. The U.S. Bank Visa® Platinum Card has an introductory APR of 0%, 21 billing cycles on purchases -- and you can choose your own payment due date. This gives you over a year and a half to pay off your $6,000 bill with zero interest, at a cost of about $286 per billing cycle.

Keep in mind that you still have to make minimum payments on a 0% APR credit card. (The "zero" doesn't mean "zero payments required.") And for most 0% APR credit cards, you will likely need to have a FICO® Score of at least 670.

Bottom line

Paying for out-of-pocket healthcare costs doesn't have to be painful. Even if you don't have a tax-deductible way to pay, like a health savings account, you have options. Applying for a 0% APR credit card can help you pay for big medical bills by spreading out your costs over time. Some of the best 0% credit cards even offer cash back and other rewards.