Paying Off One Credit Card with Another Credit Card

Paying Off One Credit Card with Another Credit Card

Written by Caitlin Wood
Last Updated October 20, 2020

Credit card debt is a serious issue, no matter where you live or who you are, it doesn’t discriminate. Credit cards are simply one of those things that aren’t explained properly in order to get people to apply for them and use them, and consequently they are often miss used which then results in debt that is difficult to repay. Typically a new credit card with a whole new balance is easier to get than the money the pay off the first maxed out credit card. This is then where some people get into financial trouble and even try to pay off one credit card balance with another.

Credit cards are convenient, easy to use and have large balances and therefore are a great financial tool for you to use especially if your paycheques don’t come in on a regular basis. Using a credit card to pay bills and make other monthly payments is, in certain situations, a good choice to make. But, what you need to understand is that you’ll eventually have to pay off the credit cards and you technically can’t do that with another credit card.

Using one credit card to pay off the balance of another credit card can’t be done directly and you credit card company definitely doesn’t want you to do it, but there are a few ways to get around this rule. If you’re set on paying one card with another then here’s how to do it but just remember that credit cards aren’t free and these options all come with a price tag.

Use a Cash Advance

This is probably the easiest option, but it could potentially cost you a lot of money and should only be used if absolutely necessary. Here’s the scenario, you have one maxed out credit card and you have a new credit card and it has available credit on it. You can get a cash advance from the second card to pay off the balance on the first card. It’s very easy to do especially if you have a PIN number associated with your card; all you have to do is go to your bank’s ATM. But here’s the catch, the interest rate will be extremely high, higher than the one you have for purchases. Not only that, but it starts to be charged right away even if you pay off the balance by the due date. So if you use the entire grace period to pay off the cash advance on your second credit card you’ll be charged roughly a month’s worth of interest. This is why it’s very important that you know what your interest rates are and understand all the consequences.

For more information on this matter, check out our article “The Problem with Cash Advances on Credit Card“.

Rob Peter to Pay Paul

If you’re currently having serious income issues and the money just isn’t there then you could start using your credit card to pay for all your daily needs and then use any cash you have to pay for your credit cards. Again this is obviously not an ideal option and could potentially ruin your finances, but if you’re in a serious bind it could work for a short period of time. Here’s the end game, if you try this option then you need to be looking for other ways to get more money right away. This, like all these options, is not sustainable for a long period of time.

Transfer Your Balance

Technically this is very similar to paying off one credit card with another and therefore might not be an option for you if your credit card doesn’t allow it. If you can find a credit card company that provides a card that allows a balance transfer then you can simply transfer your credit card balance to another card. Keep in mind that there are several issues with this option. Because we’re in Canada there aren’t many options for credit cards that allow balance transfers, you’ll definitely need to do some research but just as a heads up we only found three and they might not even be available to you or a good match for your situation. Another issue is that there are interest rates associated with this as well as potential fees. There are low interest rates available for balance transfers but they’re hard to find and in Canada it’s even harder if not impossible to find a card with a 0% interest rate. On top of all this, your credit score will need to be relatively high to be approved for both a new credit card and one with a low interest rate for a balance transfers.

Be Cautious

If your current financial situation seems like it could be bad for a while most of these options aren’t a good choice for you. These are definitely for those who are having minor issues for a short amount of time. Most of these options could put you deeper into debt and even create new financial issues, which is the last thing you want right now.

Furthermore, you need to be thinking about what moving debt around from card to card will do to your credit history and score. It could hurt your credit score and will show up on your credit report and you’ll look like you can’t handle your finances. In the end this could possibly make it harder to get credit and loans in the future.

Choose Another Option

If you’re in a bad financial situation right now then you have the potential to fix it before it gets any worse. There are other options that can help you pay off your credit card debt before it gets to be too much. First stop using your credit cards and then look for someone to help you, this could be a friend or a family member or the bank or a private lender. If you don’t have any friends or family members who are able to help you then a private loan could be exactly what you need to get out of debt. A private lender will be able to help you get a loan for the amount you need and provide you with great interest rates and a payment plan that suites your situation.

Rating of 3/5 based on 4 votes.

Caitlin is a graduate of Dawson College and Concordia University and has been working in the personal finance industry for over eight years. She believes that education and knowledge are the two most important factors in the creation of healthy financial habits. She also believes that openly discussing money and credit, and the responsibilities that come with them can lead to better decisions and a greater sense of financial security. One of the main ways she’s built good financial habits is by budgeting and tracking her spending through the YNAB budgeting app. She also automates her savings so she never forgets to put aside a portion of her income into her TFSA. She believes investing and passive income is key to earning financial freedom. She also uses her Aeroplan TD credit card to collect Aeroplan points so that she can save money when she travels.

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