Managing credit card debt can be challenging, especially if you are stuck juggling multiple balances.
In such cases paying off your credit card debt with another credit card may seem like an appealing option.
But is this possible? Let’s explore whether using one credit card to pay off another is a viable option and what it might involve.
Can You Pay A Credit Card With Another Credit Card?
The short answer is—no. Well at least not directly.
While you can’t use a credit card to pay off another credit card, you can use a credit card cash advance or a credit card balance transfer to pay off another credit card.
Let’s dive into how these options work, their risks and other alternatives.
| Note: Keep in mind that while these approaches may provide some temporary relief, the risks and costs should be evaluated when considering taking these routes. |
Paying A Credit Card Through A Credit Card Cash Advance
A cash advance allows you to withdraw cash from your credit card up to a certain limit. This cash can then be used to deposit and pay off another credit card.
How To Use A Cash Advance To Pay Off A Credit Card Bill
1. Request a cash advance via your credit card issuer’s online platform, an ATM or at a retail branch.
2. Withdraw the funds into your regular bank account or other electronic payment service.
3. Use deposited funds to pay off your credit card balance.
Risks To Consider
There are some risks points to keep in mind when utilizing a cash advance, such as:
- Higher Interest Rates. Cash advance rates are generally higher than the credit card purchase rate. While most purchase interest rates on credit cards range between 12.99% – 21.99%, cash advance rates range around 22.99% – 27.99%.
- Immediate Interest Accrual. With credit card purchases, you are given a grace period of a minimum of 21 days to enjoy interest-free. However, there is no such grace period with a cash advance and you can expect interest to start accumulating on the balance immediately.
- Cash Advance Fees. In addition to the high-interest costs, there are also other fees to consider including cash advance fees and ATM fees.
- Withdrawal Limits. Cash advances usually have lower withdrawal limits. As such, it may not be enough to cover your credit card debt.
How To Pay A Credit Card Through A Balance Transfer
A more financially sound way of using one credit to pay off another is through a credit card balance transfer. To ensure you benefit from this option, be sure to choose a low-interest card to transfer your debt. You can often find credit card balance transfer promotions with interest rates as low as 0% – 2.99% for a limited time (usually 3 -18 months).
How To Use A Balance Transfer To Pay Off A Credit Card Bill
To use this option, you’ll need to:
1. Apply for a credit card that accepts balance transfers. Be sure to choose one with a good promotional offer.
2. If approved, initiate the transfer by requesting a credit card balance transfer. You can do this by calling your credit card’s customer service department or through online banking.
3. Once you’ve made the request it may take a few days for it to process. Until the debt is transferred over, be sure to continue your payments on the card.
Learn more: Credit Card Balance Transfers: How to Come out Ahead
Risks To Consider
A credit card balance transfer may seem appealing, especially if there’s an attractive promotional offer, but there are some risks to consider:
- Balance transfer fee. A balance transfer fee is applicable in most cases, which can range between 1% – 5% on the amount transferred. This amount is added to the balance of the new credit card. However, some issuers may waive this fee as part of a promotional deal.
- Promotional Period. If you are making the switch for a lower interest rate, be sure to scan the fine print as most promotional interest rates may expire after a certain period of time (around 3 to 18 months)
- Higher Interest Rates After Promo Periods. If the balance is not paid off by the end of the promotional period, the remaining amount will accrue at the interest of the card’s regular rate (which could be significantly higher).
- Good Credit Required. This isn’t a risk, but you should keep in mind that pursuing the balance transfer route will usually require a good credit score in order to qualify for a credit card with a lower interest rate.
| Side note: Credit History is a common factor in calculating your credit score. Constantly opening up new credit cards and closing old ones will shrink your average credit age—thereby negatively impacting your credit score. |
Why Use A Credit Card To Pay Off Another?
There are a few reasons you may want to explore this, including:
Lower Interest Rates
Not all credit cards are created equal, and some come with heftier interest rates than others. Thus, it may be advantageous to shuffle debt from a high interest credit card to one with a lower interest rate (or even a 0% introductory APR). This can save you significant interest costs under the right circumstances.
Consolidation Of Debt
There is something to be said for the benefits of simplification. Consolidating multiple credit card debts onto one card can not only save you interest but help keep track of payments.
Avoid Late Payment
Late payments can negatively affect your credit score. By transferring your debt to another credit card you can avoid any late payment penalties. Plus you may get more time to repay your debt.
What Happens If You Can’t Pay Your Credit Card Bill?
As mentioned earlier, one reason for paying a credit card balance with another credit card is to avoid missing a credit card payment.
If you cannot make the minimum payment on the specified date, there can be serious consequences including but not limited to:
- Credit Score Impact. Late payments negatively impact your credit score, and can drop it by several points.
- Late Fees. Expect penalty fees that could increase your balance. While the fees aren’t too big, it adds to the balance which means interest compounds on top of the late fee.
- Higher Interest Rates. Not only will you incur interest charges your credit card issuer may decide to increase your APR as a penalty for late payment. Always remember that interest rates charged are related to perceived risk. If you are a late payer, then the credit card issuer perceives you as riskier—and may charge you a higher interest rate as a consequence.
- Debt Collection. Prolonged periods of non-payment can lead to debt collection efforts and potentially even legal action if left unchecked.
Learn more: What Happens If You Missed A Credit Card Payment?
Alternative Options to Paying Your Credit Card with Another Credit Card
If you’re struggling to make a credit card payment, but do not have the alternatives above readily available to you. Not to fear, there are some other alternatives you can consider, including:
Paying the Minimum Amount.
Paying the minimum payment on your credit card can help you avoid any late penalties. However, interest will accrue on the unpaid balance and this can add up quickly, so keep that in mind. That said, paying the minimum can give you additional time to figure out your options.
Use Credit Card Installment Payments
Many credit cards offer installment payments for large purchases. This can help lower your credit card bill making it easier to pay down. Moreover, payment options are flexible and often comes with low or even no interest rate options.
Apply For A Personal Loan
If you’re looking to save on interest and lower your monthly payments, consider a personal loan. They generally offer a lower interest rate than a credit card or payday loan. Moreover, payments can be spread over a long period of time which can help lower your payments.
Learn more: How To Consolidate Credit Card Debt In Canada: A Complete Guide
Bottom Line
Paying a credit card with another credit card may seem like a quick fix, but should only be used in certain scenarios where the benefits outweigh the risks and costs.
To avoid any late penalties, be sure to pay your minimum payment. You can also consider alternatives such as consolidating into a personal loan. Managing debt is a crucial aspect of personal financial security, and ensuring you don’t miss credit card payments.
