Can You Pay a Credit Card With a Credit Card?

Paying one credit card with another is possible, but this process typically involves specific methods and carries important financial considerations. While direct payments between accounts are generally not permitted by credit card issuers, indirect methods allow for balance transfers or using credit card funds to satisfy another card’s debt. Understanding these methods and their implications is important for anyone considering this financial maneuver.

Methods for Paying One Credit Card with Another

One common method for paying one credit card with another is through a balance transfer. This process moves debt from an existing credit card to a new or different credit card account. Consumers typically apply for a new credit card offering a balance transfer option, often with an introductory 0% annual percentage rate (APR) for a promotional period. Once approved, the new card issuer transfers the specified balance from the old credit card account to the new one, consolidating the debt.

Another indirect method is taking a cash advance from one credit card and using the cash to pay another card’s bill. A cash advance allows a cardholder to withdraw cash against their credit limit, from an ATM or bank. This cash can then be used to pay a different credit card account. While providing immediate funds, this method is generally considered a costly way to manage debt.

Some third-party payment services also enable individuals to pay bills, including credit card bills, using another credit card. These services act as intermediaries, processing payments on behalf of the user. They typically charge a transaction fee for facilitating such payments. This option is useful when direct credit card payments are not supported by the credit card issuer or the biller.

Key Financial Considerations

When considering a balance transfer, understanding the associated fees is important. Most balance transfers incur a fee, commonly ranging from 3% to 5% of the transferred amount. This fee is added to the total balance, increasing the overall debt. For example, transferring a $5,000 balance with a 3% fee adds an extra $150 to the new card’s balance.

Introductory APRs on balance transfers often offer 0% interest for a promotional period, typically 6 to 21 months. It is crucial to know the standard APR that applies once this introductory period expires. If the transferred balance is not paid off before the promotional rate ends, the remaining debt will accrue interest at a much higher variable rate, increasing the total cost.

Cash advances have immediate and substantial financial costs. Interest on cash advances typically begins accruing from the transaction date, with no grace period, unlike standard purchases. Cash advance fees are also common, often a percentage of the advanced amount (e.g., 3% to 5%) or a flat minimum fee (e.g., $10), whichever is greater. The APR for cash advances is frequently higher than the APR for purchases, further increasing the cost.

Credit Score Implications

Using one credit card to pay another can affect a credit score. A balance transfer, for example, can temporarily impact the credit utilization ratio, the amount of credit used compared to total available credit. While consolidating debt might appear to lower utilization on old cards, the new card’s utilization could increase significantly, potentially affecting the score if it exceeds recommended thresholds (e.g., 30% of the available limit).

Opening a new credit card account for a balance transfer typically results in a hard inquiry on the credit report. This occurs when a lender pulls a credit report for a lending decision and can cause a small, temporary dip in the credit score. The impact is usually minor and short-lived, but multiple hard inquiries within a short period can have a more noticeable effect.

Maintaining a history of on-time payments is a primary factor in credit scoring. When using a balance transfer or cash advance to pay another card, ensure payments are consistently made on time to the new or primary card. Missed or late payments negatively impact the credit score, regardless of how the original debt was managed. The length of credit history also plays a role in credit scoring, and closing older accounts after a balance transfer could shorten the average age of accounts, which might affect the score over time.