Can I Use a Credit Card to Pay a Credit Card?

While direct payment from one credit card to another is generally not possible, indirect methods allow for such transactions. Understanding these methods and their associated costs is important for consumers considering this approach for debt management.

Methods for Using One Credit Card to Pay Another

One common strategy involves a balance transfer, where debt from an existing credit card account is moved to a new credit card. This new card often has a lower or introductory 0% annual percentage rate (APR) for a set period. This process shifts the outstanding balance rather than involving a direct payment. To initiate a balance transfer, one applies for a new balance transfer card, and upon approval, the new issuer facilitates the debt transfer.

Another indirect method is a cash advance, which allows a cardholder to borrow cash directly against their credit limit. This cash can then be used to pay off another credit card. Cash advances can be obtained at an ATM using a credit card PIN, in person at a bank, or by requesting a transfer over the phone to a checking or savings account. The amount available for a cash advance is usually a percentage of the overall credit limit.

Third-party payment services also offer a way to use one credit card to pay another, acting as intermediaries. These specialized services may facilitate payments to credit card accounts using a different credit card. While direct credit card payments to another card issuer are typically not allowed, these platforms circumvent this by processing the transaction. These services often support various payment methods and typically come with their own fee structures.

Financial Considerations of These Methods

Each method of using one credit card to pay another comes with distinct fees and interest rate structures that can significantly impact the total cost of the debt. Balance transfers typically incur a fee, often ranging from 3% to 5% of the transferred amount, with some having a minimum charge of $5 or $10. This fee is usually added to the transferred balance.

Many balance transfer cards offer an introductory 0% APR, but this promotional period is temporary, usually lasting from 6 to 21 months. After the introductory period concludes, any remaining balance will be subject to a higher, standard APR.

Cash advances are generally more expensive than balance transfers. They typically involve an upfront transaction fee, which can be a flat amount or a percentage of the advanced amount, often between 3% and 6%, or a minimum of $10, whichever is greater. For example, a $1,000 cash advance could incur a $30 to $60 fee. Unlike regular credit card purchases, cash advances usually do not have a grace period, meaning interest begins accruing immediately from the transaction date. The APR for cash advances is also typically higher than the APR for standard purchases, often reaching around 30% or more.

These actions can also affect a consumer’s credit score and overall credit utilization. Opening a new credit card for a balance transfer can result in a temporary, slight drop in credit scores due to a hard inquiry. It also lowers the average age of credit accounts, which can influence creditworthiness. However, if a balance transfer increases the total available credit and the consumer maintains low balances, it can positively impact credit utilization, a factor that accounts for a significant portion of credit scores. High credit utilization, generally above 30% of available credit, can negatively affect credit scores.

Using one credit card to pay another, especially without addressing underlying spending habits, carries the risk of accumulating more debt. The fees and immediate interest accrual associated with cash advances can quickly increase the total debt burden. Similarly, if the balance transferred to a new card is not paid off before the promotional APR period ends, the higher standard interest rate will apply. This can lead to a cycle of debt where balances are simply shifted rather than reduced. Careful consideration of these financial realities is important to avoid exacerbating debt.