What is medical bill consolidation?

If you have multiple medical bills to pay, you may be able to consolidate these into one manageable monthly repayment. This can make them easier to manage and prevent you from falling into arrears but will often be more expensive over time due to the interest added. If you choose bill consolidation, you could opt for a debt consolidation loan, remortgage to release equity in your home, or transfer the balance onto a low or 0% interest credit card. 

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A man and woman looking at bills and using a calculator

What is medical debt consolidation?  

Medical debt consolidation allows you to combine multiple medical bills into one monthly repayment. Typically, you’ll take out a new loan to cover the total debt amount. This loan should be suitable for your existing financial circumstances and affordability.  

Not only can debt consolidation reduce the stress of having to deal with several different payment amounts, interest rates, and due dates, but it could also help you save money on interest and pay off your loans faster.  

While medical debt is often thought to be more of a problem for those based in countries with a privatised healthcare system such as the USA, it can also occur in the UK if you need to pay for specialist tests, dental care, or prescription medication, for example. UK citizens can also face charges for accessing medical care when travelling abroad, which is why having a valid travel insurance policy in place is recommended.  

How to consolidate your medical bills 

If you’re struggling to keep up with your medical bills, consider contacting your medical providers first. The hospital or healthcare provider might be happy to work with you and offer a payment plan that works for both parties.  

However, if you can’t find a solution, there are three main ways you can consolidate your medical bills:  

Personal loan  

A debt consolidation loan can be a type of personal loan. If eligible, you could use this type of loan to pay off your medical debts. This may be worth considering if you are able to access a lower interest rate (APR) and longer loan term than your current debts provide, making it easier to manage your repayments and monthly expenses. But you may end up paying more interest overall. 

Home equity loan 

If you’re a homeowner, you might be able to switch your current mortgage deal for a new one that better suits your circumstances. This could mean getting a lower APR or lower monthly repayments.

You may also be able to remortgage with additional borrowing that you can then use to pay off your medical debts.  

NEED TO KNOW: If you’re a first-time buyer, it won’t be possible to consolidate your debts into a new mortgage.  

What is equity?  

Equity refers to the current market value of your property less any debts secured against it, such as your outstanding mortgage balance or a secured loan. It is based on the current market value of your property. 

Balance transfer credit card  

If you have several medical bills paid by credit card, you might be able to move them to a new card with a low or 0% interest rate. You may need a good credit score to be eligible and fees can apply.  

Will consolidating medical bills affect my credit score? 

Consolidating medical bills can affect your credit score in different ways.  

There’s no one-size-fits-all when it comes to credit; your individual actions can have a direct impact on whether debt consolidation has a positive or negative effect on your credit score and your overall financial circumstances.  

Borrowers who take out a debt consolidation loan to pay their bills and keep up with the repayments might see their credit score improve over time, while those who miss payments or continue to build more debt could harm their score.   

Pros and cons of medical bill consolidation 

Pros Cons
All or some of your debts will be in one place.  May not be worthwhile if you have a small amount outstanding debt or terms that are due to end soon.  
It could make your bills more manageable and help you stick to a budget.  You will temporarily lose equity in your home, which would be at risk of repossession if you fail to keep up with repayments.  
You might have a lower monthly repayment (but may pay more in interest over the full term).  Your interest rate may be higher if you don’t have a strong credit score. 
Your credit score could improve if you keep up with your repayments.  Your amount of debt might increase if you continue to borrow money after consolidating.  
Your assets will not be at risk unless you choose to take equity from your home.  Your financial situation could be harmed if you fail to keep up with your repayments. 

Should I consolidate medical debt? 

Medical bills can increase your debt-to-income ratio and affect your mental and financial health if you’re struggling to pay, but debt consolidation might not the best option for you.  

Check whether your medical bills charge interest. If not, it might not make financial sense to consolidate with a loan that will likely come with added interest. In fact, you might want to focus on your priority debts or those with high interest rates first.  

However, if you’re concerned that you’ll fall into medical bill arrears and face action from a debt collection agency, bill consolidation might make it easier to repay. You’ll likely pay more in interest over time, but the lower monthly payment could be more manageable and prevent you from missing bill repayments.  

If you’re struggling with debt, you can access free financial advice and support from a professional debt specialist. Visit Money Wellness, StepChange, Citizens Advice, National Debtline, or Money Helper to find out more.  

Disclaimer: All information and links are correct at the time of publishing.