Can You Pay a Credit Card With a Credit Card?

It is possible to use one credit card to pay off another, primarily through specific financial transactions designed for debt management. This approach allows individuals to leverage existing credit lines to address outstanding balances, offering alternatives to traditional cash payments.

Understanding the Possibility

Using one credit card to address another’s balance does not involve direct payment like swiping a card. Instead, this process utilizes specific financial transactions designed for debt management. The primary mechanisms include balance transfers, which move debt to a new card, and cash advances, where funds are withdrawn from a credit line. Some card issuers also provide convenience checks.

The Balance Transfer Method

A balance transfer is a common method for consolidating or managing credit card debt by moving an outstanding balance from one credit card to another. The process begins with applying for a new credit card offering balance transfer promotions. Once approved, the new card issuer pays off the selected balance on the old credit card, and that amount, plus any associated fees, is added to the new card’s balance. This effectively transfers the debt to the new account.

Many balance transfer offers include an introductory period with a promotional annual percentage rate (APR), often 0%, for a set number of months, typically 12 to 21 months. This period allows cardholders to make payments that go entirely toward the principal balance, as no interest accrues. A balance transfer fee is charged, ranging from 3% to 5% of the transferred amount, with some cards having a minimum fee, such as $5 or $10. This fee is added to the transferred balance on the new card.

For example, a $5,000 transfer with a 3% fee results in a new balance of $5,150. The goal is to pay off the transferred amount before the promotional APR expires, when the standard, often higher, APR applies to any remaining balance. Continue making at least minimum payments on the original card until the transfer is fully processed, which can take up to two weeks.

Other Available Methods

Beyond balance transfers, other methods exist for using one credit card to pay another, though they carry higher costs. A cash advance allows a cardholder to withdraw cash directly from their credit card’s available credit limit. This cash can then be used to pay off another credit card bill. However, cash advances are considered an expensive option due to their fee structure and interest accrual.

Cash advances incur a transaction fee, often ranging from 3% to 5% of the advanced amount, with a minimum fee of around $10. Unlike standard purchases, interest on cash advances begins accruing immediately, without a grace period. The APR for cash advances is also higher than the rate applied to purchases. Convenience checks, mailed by credit card companies, operate similarly to cash advances. These checks allow access to the credit line, but they also come with transaction fees and immediate, higher interest accrual.

Key Financial Considerations

When considering using one credit card to pay another, several financial factors warrant attention. While a balance transfer offers a temporary reprieve from high interest, it does not eliminate the underlying debt. It simply moves the debt, and if new charges accumulate on either the old or new card, the overall debt burden can increase.

Understanding interest accrual is important, as promotional rates are temporary. Any remaining balance will be subject to the card’s standard APR once the introductory period ends.

Credit utilization, the percentage of available credit being used, is a factor in credit scoring. Transferring a balance to a new card with a higher credit limit can improve this ratio, especially if it lowers utilization on other cards.

However, opening a new account for a balance transfer can temporarily affect a credit score due to a hard inquiry and a reduced average account age. Success with these methods requires financial discipline, ensuring payments are made on time and new debt is not accumulated, to avoid worsening one’s financial position.