Can You Pay Off One Credit Card With Another Credit Card?

It is not exactly possible to pay off one credit card’s debt with another card, but that doesn’t mean you can’t do a balance transfer to avoid paying interest on that debt. This article tells Read the pros and cons of a balance transfer, along with tips to do it right.

Can I Use One Credit Card to Pay Off Another

As a credit card customer who already has more than one card, or who may be considering getting a second card, you could be asking yourself, “Can I pay off the balance of one card with another card?”

While the short answer is “No,” there’s another question you should ask yourself: “Why should I?”

In some cases, moving a credit card balance onto another card (known as a balance transfer) makes good financial sense, because it can simplify your payments and may help you save on interest charges.

However, sometimes paying one card off with another can lead to more financial problems.

Can You Pay One Credit Card With Another?

Can You Pay One Credit Card With Another?

No, You Can’t Pay One Card with Another

While it’s not what anyone wants to hear, the fact of the matter is that most issuers simply don’t allow you to plug in the number from Credit Card B to pay the bill for Credit Card A.

There are two main reasons behind this restriction, both more or less what you’d expect (i.e., about money).

The first reason is based on the same gripe just about any company has with credit cards: the fees. On an average credit card transaction, credit card processing fees are about 2% of the transaction total.

For a $1,000 payment, the merchant would need to pay a whopping $20 to have the transaction processed. A checking account transfer, on the other hand, can usually be completed for less than $1.

The table below illustrates the problem with credit card processing fees.

Table of Average Payment Processing Fees

The second reason for the restriction is exactly the reason many people want to use one credit card to pay another credit card bill: rewards.

If consumers were allowed to make a large purchase on one credit card, rack up rewards, then earn more rewards on a separate card from paying the bill for the first one — well, the credit card issuers would quickly start hemorrhaging money through their rewards programs.

 Options for Paying off One Credit Card With Another

Cash Advances

Most credit cards won’t let you pay your bill directly with another credit card, however, you can take out what’s called a cash advance. A cash advance is a cold hard cash issued through your credit card provider either at your local branch, ATM, or supermarket.

While this sounds convenient, there are usually some pretty hefty fees that accompany your cash advance, so you’ll want to take those into consideration.

Fees

There is an initial fee to withdraw the money, either a flat fee off the top or a percentage based on how much you withdraw. In Australia, cash advance fees are generally around 3% or $5, whichever is greater.

While this doesn’t seem too sinister, remember you are adding to your overall credit card balance when you take a cash advance, therefore increasing your total interest rate over time.

While a cash advance may solve your problem temporarily, you are essentially just shuffling your debt from one creditor to another and increasing your debt in the long term – ouch.

Consider a Balance Transfer Instead

Another option to consider is a balance transfer, which allows you to transfer the balance of your credit card to a new card with a 0% APR promotion.

There are a few that offer twelve months interest-free, however, you need to have excellent credit in order to score this deal, and there is of course a fee involved.

Most creditors charge between 3 and 5%, so it’s worth considering whether this additional fee is something you can afford to pay back in addition to your existing balance.

You’ll also need to think about whether or not you’ll be able to pay off your card by the end of the introduction period. If not, your interest rate will jump quite aggressively.

A late payment may also mean you lose your 0% interest rate, so you’ve got to be diligent if you chose this option and pay your card on time.

Another thing to watch out for with balance transfers is their terms and conditions.

Some cards, if not paid back during the introduction period, will backdate the interest all the way back to the balance transfer, which may end up costing you more than you bargained for.

By Redeeming Rewards

While this is probably not the most practical method for the majority of people, there is a way to use the rewards you earn on one credit card to pay some or all of the bill for another card.

Similar to the cash advance method, it will involve a checking account.

The first step is to redeem your rewards. If you are redeeming a cashback reward, this is as easy as simply having the credit card issuer deposit the money into your checking account.

Most rewards programs that use miles or points will also provide a cashback option.

Once deposited into a checking account, the cash rewards can be used to pay any bill you like, including a credit card. The best part of this method is that you.

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The Best Method is to Save Before You Buy

Of course, when it comes to credit cards, the best method of all is to simply save the necessary cash before making any purchases.

Not only will this save you from having to scramble to avoid paying a bill late, or missing a payment altogether, but will also ensure you don’t end up paying a lot of interest.

One of the most effective methods I’ve learned for saving, especially for big items, is actually based on more of Alan’s sage advice.

To begin with, get a slip of paper describing what you want (maybe an ad for that new TV, or, in Alan’s case, the design for a new tattoo) and place it in a jar. Then, every day or week — or just when you can — add money to the jar. That’s it.

Over time, the jar will fill up, and, eventually, you will have saved the money needed for whatever you placed in the jar. When the time comes, if you haven’t changed your mind about what you want, then go for it.

Charge the purchase for the cashback or travel miles, then pay the bill — in full — with the cash you saved specifically for that purpose. No late fees, no interest payments, and no worry over an unpaid bill. Voila!

FAQs

Can I Use One Credit Card to Pay Off Another

How do I know if a balance transfer is right for me?

If you have a high-interest credit card racking up debt and want to move this amount to a lower-interest card, consider a balance transfer for debt consolidation. Balance transfers are a helpful tool for anyone able to pay off this balance quickly and within the promotional period before interest rates rise.

Sometimes our finances can get the best of us. Even when it might seem like paying the minimum payment on your credit card is a tough task, you need to power through. If not, your credit score could be at risk.

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