Can You Pay Credit Cards With Other Credit Cards?

Credit card users often wonder if they can use one credit card to pay off another. While directly paying one credit card bill with another is generally not permitted, consumers do consider indirect strategies for managing outstanding balances. Understanding these methods and their associated costs is important for informed financial decisions.

Understanding Direct and Indirect Payments

Directly paying one credit card statement with another is generally not allowed by credit card issuers. This policy helps prevent an endless cycle of debt, where individuals might continuously shift balances without reducing their overall obligations.

Despite this restriction, consumers often explore indirect methods to manage or consolidate credit card debt. The two primary ways individuals consider using one credit card’s credit limit to address another’s balance are through balance transfers and cash advances. These methods function differently and carry distinct costs and implications.

Utilizing Balance Transfers

A balance transfer involves moving outstanding debt from one or more credit cards to a different credit card, often one that offers a lower or 0% introductory Annual Percentage Rate (APR). This strategy aims to reduce the amount of interest accrued on the debt, making it easier to pay down the principal balance. The new card issuer effectively pays off the old card directly on the consumer’s behalf.

To initiate a balance transfer, consumers apply for a new credit card designed for balance transfers. The application requires providing information such as account numbers and outstanding balances from the credit cards where the debt currently resides. A consumer’s credit score plays a role in the approval process for a new card, as well as the credit limit and terms they receive.

Balance transfer fees are a common cost associated with this process. These fees are usually a percentage of the transferred amount, often ranging from 3% to 5%, or a minimum flat fee of $5 to $10, whichever is greater. This fee is typically added to the new balance on the receiving card. For example, transferring $5,000 with a 3% fee would result in a new balance of $5,150.

Many balance transfer offers include an introductory 0% APR period, which can last anywhere from 12 to 21 months. During this promotional period, no interest accrues on the transferred balance, allowing more of each payment to go directly towards the principal. Once the introductory period expires, any remaining balance becomes subject to the card’s standard, higher APR.

After approval, the new card issuer typically handles the payment to the old credit card company. The process can take anywhere from a few days to several weeks. It is important to continue making minimum payments on the original credit card until the transfer is fully confirmed to avoid late fees or interest charges. The primary motivation for using a balance transfer is to save on interest costs and consolidate multiple debts into a single, more manageable payment. To maximize the financial benefit, it is important to pay off the transferred balance in full before the introductory APR period ends.

Considering Cash Advances

A cash advance is another method for obtaining funds against a credit card’s available credit limit, which could then indirectly be used to pay off other credit cards. This involves borrowing cash directly from your credit card issuer. While it provides immediate access to funds, it is generally considered a less advisable option for debt management due to its high costs.

Consumers can obtain a cash advance through various means, including using their credit card and PIN at an ATM, visiting a bank teller, or utilizing convenience checks provided by the credit card issuer. Each of these methods draws directly from the card’s available cash advance limit, which is typically a portion of the overall credit limit.

Cash advances come with specific fees and interest rates that make them expensive. A cash advance fee is typically charged, often ranging from 3% to 5% of the advanced amount, or a minimum fee such as $10, whichever is greater. This fee is applied to each cash advance transaction. For instance, a $1,000 cash advance with a 5% fee would incur an additional $50 charge.

Interest on cash advances begins accruing immediately from the transaction date. Unlike regular purchases, there is no grace period before interest starts to accumulate. The Annual Percentage Rate (APR) for cash advances is also typically much higher than the APR for standard purchases, often nearing 30% variable. Because of the immediate interest accrual and higher APRs, using a cash advance to pay off other credit cards is a costly way to manage debt. These factors increase the total amount repaid, often outweighing any benefits of consolidating debt.