Suppose you have high-interest balances on one or multiple credit cards and you're looking to consolidate at a lower APR. You might be asking yourself, "Can you pay off a credit card with another credit card?" In short — yes, you can pay a credit card off with another credit card, there's more than one way to do it. However, each method comes with its own pros and cons.
How to pay a credit card bill with another credit card
If you're looking to pay a credit card with another credit card, there are two main ways to go about it: a balance transfer or a cash advance. While both can be options to consider in a pinch, there are several important distinctions that are critical to an understanding before moving forward with either.
How does a cash advance work?
A cash advance is often the most expensive option. With a cash advance, you remove money from your credit card, similar to how you would at an ATM. It's then your responsibility to deposit that money in your bank account to pay off your credit card.
High fees and higher interest rates often accompany cash advances. It's also important to understand that interest usually begins accumulating the day you remove the cash. It doesn't start to accrue at the end of your billing cycle, as with a standard credit card purchase. In other words, there is no grace period with a cash advance.
How does a balance transfer work?
With a balance transfer, you're merely transferring the balance of one card to another. The main reason for doing so is to consolidate debt from a higher-interest card to one with lower interest.
Many credit card issuers have special balance transfer offers to invite people to open cards with them. The offers might include 6-15 months with a zero percent introductory APR. So for people who are looking to paying off their balance within the promotional window, a balance transfer can be an excellent choice.
You'll want to be cautious of balance transfer fees, though, which can sometimes be up to five percent of the amount transferred. It's also critical to check the interest rate you'll be charged after the promotional period ends and to look into how a balance transfer may impact your credit score. Make sure you read the cardmember agreement and reach out to your lender to verify specifics before making the transfer.
Pros of paying a credit card bill with another credit card
In certain situations and for the right people, a balance transfer or cash advance may be the best option available. And there are some immediate benefits to paying off a credit card using another card, including:
Lower APR and interest savings: If you're transferring a balance from a card with a high APR to one with a lower APR, you'll save money in interest. This allows you to focus on the principal payment of the card that now holds the entire balance.
Managing a single balance: As long as you don't continue to use the cards that have been paid off, it's easier to handle paying down one account as opposed to several.
Cons of paying a credit card bill with another credit card
Paying a credit card by using another may not be everyone's first choice. It might not be the best option if you:
- Don't intend to stop using the first card: If you pay a balance using another credit card, you should cease using the card with the now zero balance until you can pay off the higher balance.
- Struggle to make credit card payments: Paying off a credit card using another credit card may not be wise for anyone who is already struggling to make on-time payments. Consolidating the debt doesn't mean lower overall payments.
- Have poor spending habits: If you overspend or struggle to stick to a budget, you may end up adding to your balance as you work to pay it down.
Can I earn points by paying a credit card with another credit card?
Since balance transfers and cash advances aren't considered qualifying purchases, credit card issuers don't mark them as points eligible activities.
If you choose to move forward with a balance transfer or cash advance, make sure it's a smart overall financial decision. When in doubt, contact a financial professional for help in choosing the best path forward.