Paying Credit Cards Using a Credit Card – What You Need to Know

Can you pay a credit card with another credit card?

Technically, no. Most credit card issuers will not allow you to make a direct payment using another credit card but instead require a checking or savings account. However, you can get around this rule in two ways: balance transfers and cash advances.

How does a balance transfer work?

Balance transfers are the simplest way to remove debt on one credit card and move it to another. They work by using your current available credit and transferring it to the cardholder you owe a payment. Once the balance transfer is complete, you’ll make payments to the new card holding the balance.

Those with credit card debt will often use balance transfers as a way to reduce their interest rates, as credit card companies will often offer promotional rates, even going as low as 0% APR, for a certain amount of time.

However, balance transfers often come with fees and interest rates that can be higher than what you currently pay. Additionally, if you don’t pay off the transferred balance before the promotional period ends, you could end up with even more debt. Read the terms and conditions of your balance transfer request before submitting (you can often find this in your Cardholder Agreement), as some clauses may allow the card issuer to tack on interest that should have accrued during your promotional period.

Pros and cons of balance transfers

Pros:

• Pay off outstanding debt for a reduced, or 0%, interest rate
• Consolidate your debt reduction into one single payment

Cons:

• Balance transfer fees usually apply (typically around 3% – 5% of the transferred amount)
• Promotional APRs will expire, and interest may compound if not paid off
• No guarantee you’ll be approved
• Having a newly-freed credit card balance may tempt you to use it if you’re not disciplined, getting you further into debt

What you should consider before a balance transfer

Utilizing balance transfers correctly can help you get rid of debt much faster because of the promotional APRs. However, before initiating the request, take a moment to consider if you’ll be able to stop yourself from using your newly-available credit limit as “extra” money, getting yourself further into debt. Balance transfers, like credit cards, require a discipline that helps you see this as a helpful tool and not as a slippery slope to more debt.

How does a cash advance work?

Cash advances are another way to pay off a credit card with another credit card. This option involves withdrawing cash from an ATM or bank using your credit card and then using the cash to pay off the balance of the other credit card. However, cash advances come with very high-interest rates, often between 25% to 30%. Additionally, they incur a fee (usually around 5% of the withdrawal amount) immediately.

It’s important to note that cash advances are not recommended unless necessary since they can put you in even more debt due to their high-interest rates and fees.

Pros and cons of cash advances

Pros:

• Converts your available credit into cash
• Most cards allow you to withdraw cash advances from nearly any ATM worldwide
• No need for approval most times, making the cash instantly available

Cons:

• Cash advances typically have higher interest rates than standard purchases
• Interest may begin to accrue immediately instead of the usual 30-day grace period
• There may be limits for cash advances lower than your credit line

Alternative ways to pay off credit card debt

While balance transfers and cash advances may be options to pay off credit card debt with another credit card, they come with their own set of risks and fees. A better alternative may be to use debt reduction methods, such as creating a budget, negotiating with creditors for lower interest rates or payment plans, and focusing on paying off high-interest debts first. Another option is to seek the assistance of a credit counseling agency that can help you create a personalized plan for getting out of debt.

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