Many people, especially those just starting their financial journey, wonder if they can pay off a credit card using another credit card.
While it might seem like an easy solution to manage debt, the reality is more complex.
Generally, credit card issuers do not allow you to pay a bill directly with another card.
However, there are alternative methods like balance transfers and cash advances that some people consider—but these options come with risks.
Why you can’t directly pay a credit card with another card
In most cases, you cannot simply use one credit card to pay off another.
Credit card issuers do not allow this because it could lead to endless cycles of debt. They want customers to pay using cash, checks, or transfers from a bank account, ensuring that the debt is settled rather than transferred.
However, two methods—balance transfers and cash advances—can indirectly allow you to pay a credit card bill with another card. Both methods involve fees and potential risks, so it’s important to understand their details before deciding which (if any) might work for you.
Option 1: Balance transfers
A balance transfer involves moving debt from one credit card to another, often with a promotional interest rate. This can be a smart move if you’re looking to save on interest or consolidate debt, but it’s important to weigh the costs.
Pros of balance transfers
- Lower Interest Rates: Some cards offer 0% APR for an introductory period, which can help you reduce the interest you pay while focusing on paying off the principal balance.
- Consolidating Debt: If you have balances across multiple cards, a balance transfer can help you consolidate them into one payment. This can simplify your financial management and make it easier to track payments.
- Potential Savings: A lower APR means you can pay down your debt faster, potentially saving you hundreds or even thousands in interest.
Cons of balance transfers
- Transfer Fees: Many cards charge a fee—typically 3% to 5% of the transferred amount. This fee could offset the savings from a lower interest rate.
- Promotional Periods: The 0% APR or low-interest rate is temporary, usually lasting between 6 and 18 months. Once this period ends, the standard interest rate will apply, which could be higher than your previous card’s rate.
- Risk of Accruing More Debt: If you transfer a balance to a new card but continue using your old card, you could end up with double the debt.
Option 2: Cash advances
A cash advance allows you to borrow money against your credit card’s credit limit. You can use this cash to pay off another credit card bill.
However, this is one of the most expensive ways to manage credit card debt.
Pros of Cash Advances
- Immediate Access to Cash: Cash advances give you instant access to cash, which can be helpful in emergencies.
- Avoid Late Fees: If you’re facing a credit card payment deadline and lack other funds, a cash advance could help you avoid late fees or penalties.
Cons of Cash Advances
- High Interest Rates: Cash advances usually come with much higher interest rates compared to regular purchases. On average, cash advance APRs can be 24% or higher.
- No Grace Period: Unlike regular purchases, cash advances typically start accruing interest immediately—there is no grace period.
- Additional Fees: Most issuers charge fees for cash advances, often around 5% of the amount withdrawn.
What to consider before making a decision
Both balance transfers and cash advances have their place, but neither is a cure-all solution. Before deciding to use either option, consider the following:
- Fees and Interest Rates: Carefully calculate the total costs, including any transfer or advance fees and the interest rates after any promotional period ends.
- Your Payment Habits: If you have trouble managing credit card payments, moving debt around might not solve your underlying problem. It could even make it worse if you continue using the paid-off card.
- Lender Restrictions: Keep in mind that lenders typically won’t allow you to transfer a balance between cards from the same issuer.
Alternatives to balance transfers and cash advances
If neither a balance transfer nor a cash advance seems like a good fit, consider these alternatives for managing credit card debt:
- Budgeting and Paying More Than the Minimum: One of the simplest ways to manage credit card debt is to create a realistic budget and focus on paying more than the minimum payment each month. This will help you reduce the debt faster and save on interest.
- Debt Consolidation Loans: If you have high-interest credit card debt, consider a personal loan with a lower interest rate. This can help you pay off your credit card debt in one lump sum, leaving you with a single monthly payment to manage.
- Credit Counseling: Nonprofit credit counseling agencies can offer advice and help negotiate lower interest rates or better payment terms with your creditors.
Conclusion
In short, while you can’t directly pay a credit card bill with another credit card, options like balance transfers and cash advances exist. However, both methods come with fees and risks.
A balance transfer can help you save on interest if you’re able to pay off the debt during the promotional period.
Cash advances, on the other hand, should generally be avoided due to their high costs.