Can You Pay a Credit Card With Another Credit Card?

Direct payment of one credit card bill with another is generally not possible, as credit card issuers prohibit such transactions. However, individuals sometimes explore indirect methods to manage existing credit card balances. This often involves leveraging credit card features to access funds that can then be applied to another account. Understanding these indirect approaches and their financial implications is important.

Methods for Using One Credit Card to Pay Another

Direct payment of one credit card with another is prohibited. However, indirect methods can facilitate moving debt or accessing cash to pay off another credit card. These include balance transfers, cash advances, and certain third-party payment services.

A balance transfer moves debt from one or more existing credit accounts to a different credit card, often a new one. This involves applying for a new balance transfer card, which often offers a promotional annual percentage rate (APR), such as 0%, for six to eighteen months. To initiate the transfer, the cardholder provides the new issuer with the account details of the card they wish to pay off. The new issuer then pays off the specified balance on the old card, adding that amount to the new card’s balance.

Another method involves taking a cash advance from one credit card. A cash advance is a short-term loan obtained from your credit card’s available credit line, distinct from a regular purchase. Funds can be obtained through an ATM using a PIN, directly at a bank branch, or by cashing convenience checks provided by the card issuer. The cash can then be used to make a payment to another credit card bill.

Some third-party payment services or apps allow credit card payments. However, issuers may classify these as cash advances, subjecting them to higher fees and interest rates than standard purchases.

Financial Costs and Charges

Each indirect method of using one credit card to pay another carries distinct financial costs. Understanding these fees and interest rates is important before proceeding.

Balance transfers incur a fee, calculated as a percentage of the amount transferred. This fee ranges from 3% to 5% of the transferred amount, often with a minimum charge of $5 or $10, and is added to the new card’s balance. For instance, a $10,000 transfer with a 5% fee adds $500. While some cards may waive these fees, such offers are rare.

Cash advances include an upfront fee, typically 3% to 5% of the amount withdrawn, or a flat minimum like $10. For example, a $500 cash advance with a 5% fee results in a $25 charge.

Interest rates vary between methods. For balance transfers, an introductory promotional APR, often 0%, is offered for six to eighteen months. After this period, any remaining balance accrues interest at the standard APR for balance transfers, which is higher. Cash advances do not have a grace period; interest accrues immediately from the transaction date. The APR for cash advances is also higher than for standard purchases, often around 29%.

Effects on Credit and Debt

Using one credit card to pay another can affect an individual’s credit profile and debt burden. These methods primarily shift debt, influencing credit utilization, credit scores, and potential for increased debt accumulation.

Credit utilization, the percentage of available credit used, is a significant factor in credit scoring. Maintaining a ratio below 30% is recommended, as exceeding this threshold can negatively impact scores. When a balance transfer occurs, debt moves to a new card, potentially increasing utilization on that card, though overall utilization across all accounts might decrease if the old card is paid off. A cash advance directly adds to the credit card balance, immediately increasing utilization on that card.

These transactions can influence credit scores. Applying for a new credit card for a balance transfer results in a hard inquiry, causing a temporary, slight dip in the score. Opening a new account also reduces the average age of all credit accounts, which can have a minor negative effect. While cash advances do not directly appear on a credit report, increased credit utilization or missed payments will be reflected and can negatively affect the score.

These payment methods involve shifting existing debt rather than reducing it. Balance transfer fees or higher interest rates and fees associated with cash advances can increase the total amount owed. This can prolong the debt repayment period and increase the overall cost if not managed with timely payments. Consistent, on-time payments, regardless of the method used, remain a factor in maintaining a positive payment history and improving credit scores.

Issuer Rules and Agreements

Credit card issuers establish rules and terms governing how their cards can be used for balance transfers and cash advances. These regulations are detailed within the cardholder agreement, outlining permissible actions and conditions.

Direct payment of one credit card with another is prohibited by issuers, as stated in their terms. This prevents a cycle of debt that could lead to greater financial risk for both the cardholder and the issuer.

For balance transfers, eligibility requirements are in place, and cardholders need a good credit history to qualify for promotional rates. Issuers set limits on the amount that can be transferred, and transfers are not permitted between cards from the same financial institution. Promotional interest rates require the transfer to be completed within a specific timeframe after account opening, usually a few months.

Cash advances are subject to separate credit limits, which are lower than the overall credit limit for purchases. These limits are determined by the issuer and detailed in the cardholder’s account statement. Policies and terms for balance transfers and cash advances can vary between different credit card issuers and products.