Key takeaways
- You cannot directly pay a credit card bill with another card, but other options are available.
- Balance transfers let you move your debt to another card with a lower interest rate.
- Cash advances are when you borrow cash against a line of credit. You can then use the money to pay off your balance.
Imagine facing a mountain of credit card debt and wondering if there’s a way to swap one card for another. Is that even possible? Consumer credit card debt is a growing problem in the U.S. Interest rates are at a high of 24.62% APR (annual percentage rate), making it harder to pay off balances. If you can’t afford the payments, using another card to get out of the jam can be tempting.
In short, yes, it is possible to pay one credit card with another. And there’s more than one way to do it. Should you do it, though? That’s another question.
Can you pay off a credit card with another credit card?
Paying a credit card with another credit card directly isn’t possible. You cannot use a different card to make the monthly minimum payment or pay off an outstanding balance. The rule exists because financial institutions want to limit their risks. A consumer who pays their bill with another card is more likely to default. Additionally, the fees for this sort of transaction are very high.
Card issuers only accept checks, electronic bank transfers, and money orders to pay bills. While this is disappointing, there are ways around the rule. You can use a balance transfer card or cash advance as a form of payment.
Use a balance transfer card
Balance transfer cards can be used to pay off one credit card with another. If done right, you save money on interest and get out of debt faster. These cards are especially useful if you have high-interest credit card debt.
What you’ll do is transfer the unpaid balance from your high-interest account to one with a low rate. Most balance transfers come with a promotional low or 0% APR. Pay off your entire balance before the promotional period ends, and you’ll save money on interest.
Here’s how it works.
1. Apply for a card
Look for a card with an introductory 0% APR, a long promotional period, and low fees. Take your credit score into account. Most balance transfers require good to excellent credit to qualify – anything above 690 on the FICO scale.
Note that same-issuer transfers are generally not allowed. You’ll have to apply with a different provider. Once you select a suitable card, fill out an application.
2. Transfer your old balance
Contact the new provider to initiate the transfer from your original card to your new one. You will have to provide information about the debt you want to move: issuer name, amount of debt, and account information. Complete the transfer during the allotted grace period to avoid paying interest on your old account.
It can take a few weeks for the transfer to be approved and appear on your new card. Once approved, the issuer will pay off your old account directly.
3. Pay down the debt
You are now responsible for making payments on your new account. Pay it off during the introductory period, and you’ll pay little to no interest. While you’re paying off your transferred balance, don’t charge anything to either card. Adding to your debt will negate any progress you made by transferring your balance.
Need money now but can’t get a loan?
What to consider before transferring a balance
Transferring a balance from one card to another can be a strategic move to manage debt. If done right, you can save money and get out of debt more efficiently.
Before you apply for a balance transfer card to solve all your problems, consider the following factors:
Introductory or promotional rates
Look for offers with low or 0% interest rates. These low rates are usually available for a limited time, usually 12 to 21 months. Consider whether you can pay off the balance before the introductory period ends, and the standard APR applies.
Transfer fees
Balance transfers aren’t free. Providers typically charge up-front fees of 3% to 5% of the amount transferred. Make sure the savings from lower interest outweigh the fees.
Monthly payments
You now have to make minimum payments on the new account. If you didn’t transfer the entire balance, you’ll have to pay them on the old card too. Make sure that you can afford the monthly payments. You might lose your low introductory rate if you’re late or miss a payment. The issuer may even charge a high penalty APR. Consider setting up automatic payments to ensure you pay bills on time.
Lender restrictions
Creditors usually prohibit transfers between internal accounts. You will have to apply with a different financial institution. In addition, issuers will require a good credit history.
Credit limit
The limit you receive on your balance transfer may not be high enough to cover the total amount you owe. In this case, you can only transfer part of your current balance. You will end up paying off two cards plus the balance transfer fees.
Credit impact
New
Any time you apply for a new account, your score will temporarily drop a few points due to the hard inquiry. When you transfer a balance, your credit utilization ratio will shift. Whether it goes up or down depends on your credit limit. As you pay it off, your usage will decrease, which will help your score.
Avoid additional charges and make timely payments. Do these two things, and your score will go up. Any late payments will hurt your score.
Take out a cash advance
Getting a cash advance with your credit card is possible, but it is generally not advisable. The reason is it costs a lot. Typically, you won’t be doing yourself any favors with this method.
A cash advance is when you go to an ATM or local bank branch and withdraw money using your credit card. Most providers set a specific limit – usually lower than your credit limit. You can then use the money to pay off your balance.
You don’t have to withdraw cash for the transaction to be considered a cash advance. If you initiate a wire transfer or buy a money order with your card, it may qualify.
Short on cash?
What to consider before using a cash advance
Cash advances can be helpful in an emergency when you need cash. You get instant money without having to fill out an application. But, there are better choices for paying a bill.
Here’s why.
Transaction fees
Cash advance fees can add up fast. The card issuer will charge 3% to 5% of the transaction amount or a flat fee, whichever is greater. The ATM will also likely charge a fee. Be sure to account for this when considering the amount you need.
High APR
When you use your card to make regular purchases, you won’t accrue interest until the end of the billing cycle. Most companies provide a 21-day grace period, but this isn’t true with advances.
When you withdraw cash, you accrue interest immediately. There’s no grace period. On top of that, the credit card company charges a higher APR than they do for regular transactions.
Credit impact
Taking out an advance can hurt your score since it increases your utilization ratio.
Limited amount
The amount of money you can withdraw is often lower than your total credit limit. You may not be able to access the full amount you need.
Overall, cash advances tend to be more expensive than other options. While they can be helpful in an emergency, paying your credit card bill with them is not a good idea.
What should you do when you can’t pay your bill?
It’s stressful when money is tight, and you can’t afford the minimum payment on your credit cards. Not being able to pay one card with another removes a loophole that could have been very helpful. If this is the case, here are some things to think about.
Review your finances
Start by looking at your credit card accounts and overall budget. Get a sense of how much you owe and the interest rates. Then, look at your income and necessary expenses (rent, utilities, groceries) to find out how much you can afford to pay. See if there’s anything you can cut back on (subscriptions, eating out, cheaper phone plan). The next step is to decide which bills take priority.
Call your creditors
Anytime you’re struggling to pay a bill, let your creditors know before you miss a payment. They may be able to help you. Many credit card companies offer temporary hardship programs. These can lower your minimum payment, waive interest or fees, and provide temporary relief. If you don’t qualify for a hardship program, your creditor may offer a payment plan or you may be able to negotiate down your debt. Be honest about your situation and polite. You never know what solution they may offer to get you out of debt.
Persistent money trouble? Consider other options
If keeping up with the minimum payments is a monthly struggle and you feel overwhelmed by debt, it’s time to explore long-term solutions. You could consolidate your debt by taking out a personal loan. You take out a loan at a lower interest rate and then use the funds to pay off your balances. You’re left with one affordable monthly bill. Loans come with fees, and you will need a good score to get a low APR.
Credit counseling is another option that does not require good credit. Visit a non-profit credit counseling agency for free advice on budgeting, debt management, and more. A counselor can set you up with a debt management plan. They will negotiate with your creditors for lower interest rates and waived fees. You then make one monthly payment to the agency, and your counselor will distribute the money. It’s similar to taking out a debt consolidation loan, but you don’t have to apply. A debt management plan can be a good way to get out of debt efficiently and for less.
When your debt is greater than 40% of your income, and there’s no way to pay it off in the near future, consider debt settlement or bankruptcy. Bankruptcy is normally considered a last resort.
Debt settlement can be more appealing. This is when you work with a debt settlement company that negotiates with your creditors to accept a lump-sum payment lower than you owe. You get out of debt for less, but your credit score will suffer; there are fees and tax implications.
Frequently asked questions
1. Can I pay my credit card with another credit card?
Yes, but not directly. Financial institutions generally don’t allow direct payments from one card to another. You can use a balance transfer card or cash advance to pay your bill. A balance transfer involves moving debt from one card to another, often with a low promotional interest rate. A cash advance lets you withdraw cash from a credit card for payments—but this comes with transaction fees and a high APR.
2. How do you transfer money from one card to another?
You can transfer money between credit cards using a balance transfer card. You apply for the card and the new issuer will pay off your old balance. These cards typically come with low promotional APRs and fees.
3. Can I use a debit card to pay my credit card bill?
It depends on your credit card issuer’s policies. Some issuers do allow debit card payments, but most do not. They require a direct transfer from your bank account. Instead of putting down your debit card information, you will need to provide your routing and bank account number.
4. Can I earn points by using a credit card to pay off another credit card?
No, credit card payments do not count as purchases and, therefore, do not earn rewards points.
5. Is it possible to pay rent with a credit card?
You can pay rent with a card if your landlord or property manager accepts credit card payments. This payment method can be more expensive since most providers charge a processing fee of 2% to 3% of the rent amount.
Bottom line
In the end, paying one credit card with another isn’t straightforward or recommended. Financial institutions don’t directly permit this method because it can lead to a cycle of debt.
If you qualify for a balance transfer, it can be a good way to pay off balances and manage debt. If you cannot, consider other solutions, such as using emergency savings, a debt consolidation loan, or negotiating with your creditors.
Paying off debt will feel amazing in the end. To keep this feeling, you need to change your spending habits. Find a budget that works for you, and don’t charge what you can’t afford to pay for in cash. You’ll stay debt-free and won’t have to worry about credit card payments.
