Generally speaking, it's technically impossible to pay for one credit card with another. There are several workarounds to this that involve using cash advance transactions, though these are bad financially for consumers and lead to your overall debt increasing. In most cases, doing this will result in your bills becoming harder to pay off. One good course of action consumers have is to use something called a balance transfer. This involves shifting your outstanding balance from one credit card to another, and is a far more affordable option.
- Paying For One Card With Another Card
- Better Alternative: Transfer Your Balance From One Credit to Another
Paying For One Card With Another Card
There are two alternate ways of effectively paying your bill with another credit card: using a cash advance or relying on a convenience check. As we explore in the next section, neither solution is ideal. Most credit card issuers don't allow their customers to simply enter another credit card's number to pay their bill. Therefore, these are indirect ways to pay your credit card with another card.
Cash Advances. You can use your credit card to take out money at an ATM, which you can then use to pay your credit card bill. This practice is commonly referred to as a cash advance. This special transaction follows different rules than those on a regular purchase. First and foremost, cash advances are subject to an entirely different limit. For example, you may have a credit limit of $11,000, and a cash advance limit of just $3,000. This will impact your ability to pay off any outstanding credit card bills, since you need to keep that ceiling in mind. Advances come with additional fees and entirely different interest rates. We go over these fees, and why they make cash advances a rotten deal, in the next section.
Convenience Checks. You can request your credit card issuer mail you a so-called convenience check, which you can then use to pay off a credit card bill. These look like an ordinary check, and can be deposited into a checking or savings account. For all intents and purposes, once the check clears the transaction is treated just like a cash advance, so the mechanics are no different than those we described above. The only benefit of using a convenience check over a traditional cash advance is that you get to skip paying any extra ATM fees. However, all other cash advance fees and interest rates still apply.
Why This Is A Bad Idea
Paying for a credit card with another credit card is ill-advised because it will leave you with high fees and interest charges.
Firstly, whether you take money out at an ATM or cash a convenience check, you will be charged a cash advance fee right off the bat. This fee is proportional to the money you take out — usually around 5% of the total amount. For example, if you take out $2,000 to pay off a $2,000 credit card bill, you will be saddled with an extra $100 that you will need to eventually pay off. That means you move from being $2,000 in debt to owing $2,100.
The real financial risk involved with cash advances, however, is their high interest rates. You are almost guaranteed to pay higher interest after taking one out than whatever APR you were paying on your previous outstanding balance. The average interest rate on credit cards is around 14%. The mean cash advance APR is a whopping 25% — over 10 points higher.
Therefore, if you use either a traditional cash advance or a convenience check, not only will you be paying a high fee up-front, but you will most likely be refinancing your debt at a higher interest rate.
Better Alternative: Transfer Your Balance From One Credit to Another
Instead of paying one credit card with another, you should transfer your balances between the two cards. Though this may sound like semantics, there are differences between paying for a card with another card and performing something called a balance transfer. The latter is a more official way to moving your debt from one card to another and, unlike the methods we explained above, it can actually be beneficial to those in debt.
To do this, you need to contact your current card issuer — the one you want all the balances transferred to. You then need to provide them with all your card details, such as the account number, and they'll handle the rest. If you get a special balance transfer credit card, you can even get 0% promotional APR on that balance you moved over. This is the recommended course of action.
Even though balance transfers come with an upfront fee, their lower interest rates make it a worthwhile financial move. Unlike cash advances, the ongoing APR from a balance transfer tends to be more in line with standard purchase APRs, and not as high as the interest charges on cash advances. You can use the tool below to estimate your total savings from a hypothetical balance transfer. Simply enter your current credit card details, and how long of a 0% promotional APR you would get.
Please enter the details of the card you are transferring balances to:
promo length (months)
APR after promo
Visualizing Your Savings
Another added benefit of a balance transfer credit card is the fact that it speeds up how quickly you pay down your debt. The following graph can help you visualize this. Use the drop down menu to choose between graphing your remaining balance, savings, or interest paid.
Know that balance transfers often come with a few restrictions. The most important limitation is that, most of the time, you cannot transfer your balance between two cards in the same bank. That means if you have two cards, the only way you can use one to pay for the other is by turning to a cash advance, as we outlined in the opening of this guide.
Also, balance transfers are typically capped at $15,000. Even if your credit line is greater than this, most banks will not process a transfer that is greater than this amount.