How to Pay a Credit Card With a Credit Card

Using one credit card to pay another might seem counterintuitive, but specific methods exist. These approaches leverage one card’s credit line to manage or settle another’s outstanding balance. While direct payment is generally not permitted by issuers, indirect pathways exist. Understanding these methods involves recognizing their mechanics, costs, and potential benefits or drawbacks.

Balance Transfers

A balance transfer involves moving debt from existing credit cards to a different credit card, often a new one. This strategy is employed to consolidate debt or to take advantage of a lower interest rate, particularly a promotional 0% Annual Percentage Rate (APR), on the new card. The goal is to reduce total interest paid, allowing more of each payment to go towards the principal balance.

Before initiating a balance transfer, consumers should assess their eligibility and creditworthiness. Lenders require good credit scores and a solid credit history to qualify for favorable offers. The new card may have a limit on the amount that can be transferred, which could be less than the card’s overall credit limit. Transfers between cards from the same issuer are generally not allowed.

Balance transfer fees are a common cost associated with this method, typically ranging from 3% to 5% of the transferred amount, often with a minimum charge such as $5 or $10. This fee is usually added to the transferred balance. Some credit cards, often from credit unions, may offer no balance transfer fees, but these might have stricter eligibility requirements.

Promotional APRs, such as 0% interest, are a significant draw, typically lasting for an introductory period of 6 to 21 months. After this promotional period concludes, any remaining balance will be subject to the card’s standard, often higher, APR. Consumers must diligently review all terms and conditions, including the post-promotional APR and any annual fees on the new card.

To initiate a balance transfer, apply for a new credit card specifically offering balance transfer promotions. Once approved, the cardholder requests the transfer, providing details such as the old credit card’s account number and the amount to be moved. The processing time for a balance transfer can vary, sometimes taking up to two weeks or longer. During this period, it is crucial to continue making minimum payments on the old credit card to avoid late fees or interest charges until the transfer is fully completed and confirmed.

Cash Advances

A cash advance involves borrowing cash against a credit card’s available credit limit. While it provides immediate access to funds, it is an expensive way to obtain cash and is not recommended for paying off another credit card.

Cash advances come with immediate and significant costs. A cash advance fee is charged, usually a percentage of the amount withdrawn, ranging from 3% to 5%, or a minimum flat fee, such as $10, whichever is greater. Interest on cash advances begins to accrue immediately from the transaction date, without any grace period. The Annual Percentage Rate (APR) for cash advances is higher than the APR for standard purchases.

There are several ways to obtain a cash advance. One common method is to use the credit card at an ATM, requiring a Personal Identification Number (PIN). Alternatively, a cash advance can be obtained directly from a bank teller by presenting the credit card and a valid ID. Some credit card companies also provide convenience checks, which allow the cardholder to write a check against their credit line, functioning as a cash advance.

Third-Party Payment Services

Third-party payment services are platforms that facilitate bill payments, including credit card bills, even to payees who do not directly accept credit card payments. These services act as intermediaries, processing a payment from your credit card and forwarding funds to the biller via an accepted method, such as a bank transfer or check.

A primary consideration with these services is the fees they charge. These fees are a percentage of the payment amount, typically 2% to 3% or more. Some services may also impose limitations or restrictions, such as limits on transaction amounts or specific types of bills they can process.

To use such a service, set up an account with the chosen platform. This involves linking both the credit card from which the payment will be drawn and the credit card account to which the payment is directed. The user then inputs the payment amount and authorizes the transaction. The third-party service processes the payment from the originating credit card and ensures funds are remitted to the intended credit card issuer.