If you have a lot of medical bills all at once, you may need to consolidate them. Many people spend way too much of their income on credit debt every month. If they combine their bills, they can either free up some of their income to pay for monthly medical costs or borrow more to pay for big hospital bills and other costs while keeping their payments the same.
Bills can be grouped together in a number of ways. If you own your own home, a home equity loan may be the cheapest way to lower your monthly credit payments. But there's always a risk when you use your home to pay off debt. You could lose your home if you can't pay back the second loan. Chances are, though, that you will stay where you are, even if the payments go down or stay the same.
But if the medical bills are likely to come in at different times, a homeowner may be better off using a home equity line of credit to pay off all the bills at once. The good thing about this loan is that you don't have to pay it back all at once, whether you need the money or not. It's kind of like how a checking account works. You can only get into the account when you have to pay something. So, you won't be charged interest on money that just sits in your account. You won't have to pay interest until you take the money out of the account.
Most people who want to combine their bills use a personal loan. Most of the time, the interest rates on personal loans are lower than those on credit cards. This means that the monthly payments are also usually lower. When you use a personal loan to pay off bills, you will have paid off the original debt at the end of the loan term. But they might not be flexible enough to meet your needs in an emergency medical situation.
Transferring all balances to a credit card with a low rate is an often-overlooked way to get rid of debt. Most of the time, people use bill consolidation to get out of credit card debt, not to add to it. But low-rate credit cards can lower your monthly payments and give you more freedom with your credit limit so you can pay for ongoing medical costs. When getting a credit card, it's important to read the terms and conditions very carefully. Know that there are fees for late payments and that the interest rate could go up. If you use this method to consolidate your debt, you run the risk of adding to your credit card debt, which would put you in a worse position than before.
So, if you get a bunch of unexpected medical bills all at once and start pulling out your hair in worry, take a step back. You might be able to get some much-needed breathing room by combining your bills. If you consolidate your debt, you'll be able to get more money or borrow more to help you get through hard times.
