Your credit card payment is fast approaching, and you’re freaking out. The problem isn’t paying the total balance—it’s that you can’t even afford the minimum required payment. Can you pay a credit card with another credit card? Yes and no.
Most credit card rules won’t allow it—at least not directly. It’s simply too expensive for credit card companies to process these transactions.
There are a couple of indirect ways you can pay a credit card with a credit card: cash advances and balance transfers. Even better, there are longer-term solutions that don’t involve a second credit card.
Avoiding the Issue in the First Place
The best way to avoid a situation in which you are considering using one credit card to pay another is by paying your entire credit card statement balance every month.
Making credit card payments in full and on time will allow you to avoid paying interest.
Paying the statement balance in full each billing cycle also reduces the chance of accumulating debt that is hard to pay off.
At the very least it is important to make minimum payments to avoid negative effects on your credit score.
Recommended: Why is Credit Card Debt So Hard to Pay Off?
Paying a Credit Card With Another Credit Card
Taking a Cash Advance
You can’t pay one credit card with another directly, but you might be able to pay a credit card with a cash advance from another card.
Let’s say you have two credit cards: Card A and Card B. You can’t afford to make your minimum payment on Card A, so you’re looking to Card B for a little help. You have the option to take a cash advance from Card B.
You could use Card B to withdraw cash from your checking or savings account at an ATM. Then you’d deposit that money into your checking account and make an online payment from your bank account or with a debit card.
Pros of a Cash Advance
Taking out a cash advance may be the right option if your situation meets three criteria: You’re trying to pay a small amount on Card A, you already have a second credit card to use for this transaction, and Card B has a lower interest rate than Card A.
Most credit card companies limit how much cash you can withdraw with your credit card per month. If your withdrawal limit from Card B is $5,000, though, and you want to make a payment of $500 on Card A, things shouldn’t get too sticky.
Cons of a Cash Advance
Your credit card company might not allow you to withdraw enough money per month to pay off your other credit card. Your cash advance limit isn’t necessarily the same as your monthly spending limit. Before you take a cash advance, you may want to contact the company that issued your second card to inquire. Or check a statement.
Also, interest usually starts accruing on the amount you withdraw from the moment you take the cash advance. The annual percentage rate (APR) for a cash advance will typically be higher than the purchasing APR on the card. As a result, it’s possible to go even further into debt.
What’s more, you’ll likely pay a fee to take a cash advance. The amount will depend on the credit card company, but you can usually expect to pay the greater of $5 to $10 or 3% to 5% of the amount you withdraw.
Completing a Balance Transfer
If you don’t have another credit card, or your cash advance allowance is too low, you might consider a balance transfer, which would allow you to transfer the balance on Card A to Card B.
Ideally Card B would have a lower interest rate or none at all. You could potentially pay off the total balance more quickly because more of the money you used to pay in interest is going to pay off the principal, or you’re not accruing interest at all.
You may complete a balance transfer only by using a designated balance transfer credit card.
Pros of a Balance Transfer
Certain credit card companies offer balance transfer credit cards with no interest for the first six months or more. When you shop around for a new card, you’ll typically hear the grace period referred to as an “introductory balance transfer APR period” or “promotional period.”
During this period, you can work on paying off your debt without paying any interest.
Cons of a Balance Transfer
While balance transfers may be a godsend for paying off your balance in a set amount of time, what if you can’t nibble away at the total balance quickly?
Once the introductory balance transfer APR period ends, the interest rate will shoot up, and the balance transfer card won’t seem so magical anymore.
If you miss a payment, most companies will suspend the introductory APR period on Card B, and you’ll have to pay what’s known as a default rate, which could end up being even higher than the rate on Card A. Even if you consider yourself responsible enough to make all your payments on time, a financial emergency could throw you off track.
There are also generally fees associated with balance transfers, though they’re often lower than cash advance fees.
It’s worth mentioning that you can’t use balance transfers or cash advances to get credit card points or miles.
What If I Can’t Pay My Minimum?
If for whatever reason a cash advance or balance transfer isn’t available to you, you may still have trouble making your minimum payments. If this is the case, stay calm and assess your situation.
You may want to gather your credit card statements and put your debts in order, either from largest to smallest or from highest interest rate to lowest. This step can help you understand how much debt you’re in and how to prioritize your bills.
You may decide to tackle the largest debts first, or even your smallest to gain momentum. Or you may decide to save money on interest by focusing on credit cards with the highest interest rate first.
You may consider talking to your creditors to see if they can help. A credit hardship program could give you more time to pay off your balance or adjust your terms.
What About a Personal Loan?
Taking out a personal loan is an option for paying off a large credit card bill. A personal loan may come with a lower interest rate than a credit card, and may be more manageable in the long run.
Pros of a Personal Loan
Most credit cards come with variable interest rates, meaning the rate can change over time with shifts in the economy. An unsecured personal loan usually has a fixed rate. (Unsecured means the loan isn’t secured by collateral, like your home or car.)
If you have a good credit score, your rate for a personal loan could potentially be lower than your credit card rate.
If that is the case, you could take out a credit card consolidation loan, then make payments on the loan at the lower interest rate. You’d likely end up paying less in interest over time and might be able to pay back the loan more quickly than you’d be able to pay off the credit card.
Taking out a personal loan also could help your credit utilization ratio, the amount of available revolving credit you’re using. Credit utilization affects your credit score.
Your credit score also is favorably affected when you’re able to consistently pay bills on time.
Cons of a Personal Loan
Taking out a personal loan to pay off a credit card isn’t for everyone. Maybe you’ve realized you have trouble controlling your spending, and that’s why you have credit card debt to begin with. Having a personal loan to fall back on could tempt you to spend even more with your credit card.
Also, a lower interest rate isn’t guaranteed. If you discover that your loan rate could be higher than your card’s rate after inquiring with a lender, taking out a loan may not be the best choice.
No matter how low your personal loan interest rate is, it will still be higher than the rate during an introductory APR period for a balance transfer.
The Takeaway
Can you pay a credit card with another credit card? Indirectly, yes, with a balance transfer or cash advance. While those moves can work in a pinch, each has potential drawbacks.
Taking out a fixed-rate personal loan with a clearly defined payment schedule may be the better long-term option. SoFi offers personal loans with no fees required.
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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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