We all go through rough financial patches. Sometimes, paying the bills can seem like a struggle that never ends. Even making a minimum payment on your credit card can be difficult. That’s when using one credit card to pay another credit card might seem like a good idea.
While this is something that can be done, you should be careful to understand how it works before you proceed. Make sure you are aware of the costs involved. And understand there are consequences if you merely move debt around rather than actually paying it off.
Let’s take a deeper look, so you can decide if it’s the right path for you.
Can you pay one credit card with another?
Using one credit card to pay another isn’t as simple as it might sound. You can’t just plug your credit card information into the payment details and be done. Instead, you will need to use your card to place funds into your checking, savings or money market account to make the payment.
Here are a few of the most common ways to pay one credit card with another card:
1. Cash advance or a convenience check – Easy but expensive
One of the easiest ways to use your credit card to pay another credit card is through a cash advance. You start by withdrawing cash from an ATM using one credit card, deposit that cash into your checking account and then use those funds to pay your other credit card bill.
This might be one of the easiest solutions, but it’s also one of the most costly.
Cash advances are usually subject to a much higher interest rate than purchases or balance transfers,” says Jason Steele, credit card expert with Offers.com. “In addition, most credit cards have a cash advance fee of 5%.”
That means the more you take out, the more it will cost.
“Cash advances are not subject to the same grace period that purchases are, so you will always owe interest charges, even when you pay your statement balance in full,” says Steele.
Similar to a cash advance, convenience checks offer another way to pay one credit card with another. The chances are you have received convenience checks in the past. These can be used different ways, but frequently they’re used to pay off a credit card with a higher interest rate.
Unfortunately, the cost to use a convenience check is the same as a cash advance. While both of these are available options, they come with high costs and are usually not the best option available.
2. 0% balance transfer card – Beware of transfer fees
To avoid the high fees and the costly interest payments that can occur when using one credit card to pay another, one of the best options available could be a balance transfer credit card.
By using one of these cards, you will be moving your existing balance from one or more of your cards to the new balance transfer card. If your new card has a 0% introductory rate, you will effectively wipe out all interest payments for a period.
“Many credit cards offer new applicants 0% annual percentage rate (APR) balance transfers that remain interest-free for between six and 21 months,” says Steele. “Nearly all of these offers require the payment of a 3 to 5% balance transfer fee, which can be well worth it for an interest-free loan.”
Even though you will still need to make monthly payments on your balance, the total amount you pay would be significantly lower because there is no interest added.
If you choose to use a balance transfer card, it’s crucial that you understand one important thing: You must make all your payments on time. Missing one payment, even by a couple of days, could wipe away the introductory 0% offer. If that happens, your interest payments can begin immediately.
3. 0% on purchases card – no transfer fees, but complicated
Another way to use a credit card off with another is to use a credit card that offers an introductory 0% on purchases. Some balance transfer cards will include the introductory rate on purchases, but not all.
Using a credit card that offers 0% on purchases will require a little more work than other methods.
These cards, similar to balance transfer cards, will offer 0% for up to 21 months. Because you won’t be paying interest on purchases, you can use the new card for those daily expenses you would normally pay in cash – or with your debit card. Keep track of these payments, and then withdraw the equivalent amount of cash from your bank account to cover each purchase and pay down the credit card that charges interest.
With this method, you are essentially moving your debt from a high interest rate credit card to a card with an introductory 0% offer. This can help you to avoid the balance transfer fee that most cards would charge.
Again, though, be careful. Make sure you construct a plan to get yourself out of debt before the introductory period ends. If you don’t, you will be back where you started, paying potentially high interest on your credit card debt.
The Bottom Line
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. If you have been thinking about paying one credit card off by using another credit card, it’s possible. But some strategies are better than others, so it’s important to do your homework beforehand.
Sean Bryant is a Denver based freelance writer specializing in travel, credit cards and personal finance. With nearly 10 years of writing experience his work has appeared in many of the industries top publications. He holds a Bachelor of Arts degree in economics and runs OneSmartDollar.com.