Can You Pay a Credit Card With a Credit Card?

Many wonder if one credit card can pay off another, often when managing existing debt. Understanding the mechanisms and implications is important for effective personal finance.

Balance Transfers

A balance transfer involves moving debt from one credit card to a different credit card, typically to take advantage of a lower promotional annual percentage rate (APR) offered by the new card issuer. This process can consolidate multiple debts into a single payment. To initiate a balance transfer, you generally need to provide the account number and outstanding balance of the credit card you intend to pay off.

Eligibility depends on creditworthiness; applicants usually need a good or excellent credit score (FICO 670+). Compare offers by examining introductory APR, promotional period duration, and balance transfer fees. Fees are usually 3% to 5% of the transferred amount, often with a minimum of $5 or $10.

After approval, submit a balance transfer request online or by contacting the issuer. The new issuer typically pays the old card directly, or sometimes issues a check for you to forward. Processing can take two days to six weeks, though some complete it in five to seven business days. Continue payments on the old card until the transfer is complete to avoid late fees.

Cash Advances

A cash advance allows you to borrow cash directly from your credit card’s available credit limit. Unlike standard purchases, interest on a cash advance begins accruing immediately, without a grace period. Obtain a cash advance by withdrawing funds from an ATM with your card and PIN, receiving cash from a bank teller, or using convenience checks from your card issuer.

For ATM withdrawals, insert your card, enter your PIN, and select the cash advance option. The amount and fees appear on your statement. Fees are a flat amount or percentage, usually 3% to 5% of the transaction or a minimum of $10. APRs for cash advances are significantly higher than for purchases, often 22.99% to 27.99%, sometimes nearly 30%.

Alternative Debt Management

For alternatives to using one credit card to pay another, several strategies manage credit card debt. One approach is a debt consolidation loan, a personal loan from a bank or credit union. These loans combine multiple credit card balances into a single loan with a fixed interest rate and set repayment term, often offering a lower overall interest rate than credit cards. Interest rates for personal loans range from 6% to 35.99%, depending on creditworthiness.

Another method is a structured budget to allocate income towards debt repayment. A detailed budget helps identify funds to make more than minimum payments, accelerating debt reduction. This approach uses earnings or savings to reduce principal.

Non-profit credit counseling agencies offer debt management plans (DMPs). Under a DMP, the agency works with creditors to lower interest rates, waive fees, and combine unsecured debts, like credit card balances, into a single monthly payment. You make one payment to the agency, which disburses funds to creditors, aiming for debt payoff within three to five years.