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Paying for health insurance with a credit card

Looking to pay for health insurance with a credit card? Find out when it's possible and the risks to avoid.

If you’re looking for an easier way to pay for your health insurance premiums, have you considered using plastic? It’s simple and convenient to pay your health insurance premiums with a credit card and using plastic can also help you access a wide range of other benefits.

Let’s examine the pros and cons of paying for health insurance with your credit card and what you need to do to get started.

Can I pay for health insurance using a credit card?

Yes, you can pay your health insurance premiums with a credit card. Regardless of whether you’re a member of a major fund or a smaller restricted-access fund, credit card is a widely supported premium payment option across the board.

Using your credit card can be a much more convenient option than some other payment methods, such as mailing a cheque or paying in person at a health fund branch, with most health funds allowing you to use your credit card when paying premiums online or over the phone.

You will need to provide the following details to pay insurance premiums using your credit card:

  • The type of card. Visa and Mastercard are widely accepted, while some funds also accept other cards
  • The name on the card
  • Your card number and expiry date
  • The CVV on the back of the card

Can I pay for health insurance via direct debit?

Another option when paying your health cover premiums is to set up a direct debit from your credit card. To do this, it’s a simple matter of filling out a form provided by your health fund with your credit card details. Your fund will then deduct the relevant premium amount from your credit card each month, quarter, year, or whenever your regular premium payment is due.

There are several benefits to paying your health insurance premiums by direct debit from your credit card, including:

  • It’s convenient. Setting up a direct debit saves you the hassle of having to manually enter your payment details each time your premium is due.
  • You’ll never forget a payment. A direct debit from your credit card automates the premium payment process for you, which means you’ll never have to worry about your cover lapsing after you forget a payment.
  • You can earn rewards. If your credit card offers a rewards or frequent flyer scheme, you could earn points for paying your health insurance premiums with your card.
  • Discounts. Some Australian health funds offer premium discounts when you choose to pay by direct debit.
FundDirect debit discountAnnual payment discount
4%
  • Annual: 4%
  • Biannual: 2%
4%
n/a
n/a
  • Annual: 2.5%
2%
n/a
  • Annual: 4%
  • Biannual: 2%
  • Annual: 4%
  • Biannual: 2%
2.5%
n/a
n/a
  • Annual: 4%
  • Biannual: 2%
4%
n/a

What are the dangers of direct debit from your credit card?

While direct debits from your credit card undoubtedly have their benefits, there are a few downsides to be wary of. These include:

  • Changing credit cards. If you change to a new credit card, it’s vital that you remember to cancel the direct debit on your old card and set it up on your new card. If you don’t remember this step, you could end up without health insurance cover.
  • Changing health funds. If you switch health funds, you’ll need to remember to cancel your old fund’s direct debit before arranging payment to your new fund.
  • Insufficient credit. If your credit card is maxed out, your automatic direct debit may not be able to be completed and your health cover may lapse.
  • Not reviewing your options. With a direct debit taking care of your premiums, it can sometimes be easy to push thoughts of health insurance to the back of your mind. However, it’s worth reviewing your cover regularly to determine whether it still suits your needs and whether any premium increases make the cover too expensive for you.
  • Paying interest. Of course, you will also have to pay your credit card off before the interest-free days come to an end and interest charges apply.

Will I be charged a cash advance rate?

Another risk you should be aware of is whether your credit card provider treats your health insurance premium as a purchase or as a cash advance. If your card provider classifies health cover premium as a purchase, you will be able to take advantage of the interest-free days available on your card and also earn reward/frequent flyer points (if your card offers them).

However, some card providers will classify a health insurance premium payment as a cash advance, which means it will attract a higher interest rate than purchases and you will not be able to take advantage of any interest-free days. A cash advance fee may also apply to your transaction.

You generally can’t earn reward points on cash advances either, so it’s a good idea to check the terms of your credit card contract before using plastic to pay for your health insurance premiums.

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