Pay Off A Credit Card With Another Credit Card

Pay Off A Credit Card With Another Credit Card – Typically, you can’t pay off the entire balance on one credit card with another unless you transfer the debt from one card to another through a process called a balance transfer. While this approach may work for some financial situations, it is not right for everyone. Since transferring debt from one credit card to another may not be a good idea for your unique financial situation, you may want to weigh your options and consider other ways to pay off your credit card balance directly.

This article discusses whether you can use one credit card to pay off another and suggests other options for paying off credit card debt.

Pay Off A Credit Card With Another Credit Card

In some cases, you may choose to pay one credit card with another credit card through a balance transfer. Balance transfers allow cardholders to transfer outstanding balances from one credit card to another, usually for a fee.

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Credit card issuers often offer introductory periods for new credit cards that include 0% interest or a low APR (annual percentage rate) on balance transfers, which gives you a way to consolidate your debt into one account with the company.

While this provides an indirect way to use one credit card to pay for another, evaluate the terms carefully before choosing this route. There is a limited introductory period, and you may end up paying a high interest rate after the term expires.

Credit card companies usually require you to meet certain criteria for a balance transfer, including a good credit score. If you have bad credit, you may find it difficult to qualify.

Also, the approved line of credit may not cover the amount you owe. Because lenders have different terms and conditions, consider shopping around and checking the terms and conditions of different credit card issuers before applying for a balance transfer card. [2]

Pay Credit Card Bills

To determine whether a balance transfer will save you money in the long run, you need to do the math.

Let’s say you currently have a credit card with an APR of 20%, a balance of $2,500 and a monthly payment of $250. It takes 12 months to pay off the debt, and you’ll pay a total of $2,758, including $258 in interest and fees.

Assuming a 5% APR on the new balance transfer card (assuming the 0% introductory APR expires after 12 months), including the 5% balance transfer fee, you’d pay $250 a month. Paying off your debt with a balance transfer takes 11 months, and you’ll pay a total of $2,625.

In this case, you may find that transferring your balance to a new card is worth your time and effort. Additionally, this calculation assumes that the new card has no annual fee and that the introductory APR lasts for 12 months. The introductory period for balance transfers can only last for 6 months, so be sure to factor that into your calculations.

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Because cards and issuers have different approval requirements and credit limits, find the best balance transfer credit card based on your unique situation. The Forbes balance transfer calculator can help compare options.

While you may be tempted to get a cash advance from another card to pay off your debt, these cash advances often come with a hefty price tag.

In addition to paying ATM fees and cash advance fees, you may also pay a higher APR on your cash advance than you would on regular purchases. Since cash advances can increase your debt, avoid using them except as a last resort in a financial emergency. [5]

Instead of choosing a balance transfer or cash advance, you may want to consider other options to help organize your personal finances.

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When you feel like you can’t manage your debt on your own, these services can help you take back control of your finances.

If you have good credit, you may consider taking out a personal loan to pay off your credit card debt. This idea makes sense if you get a personal loan with a lower interest rate than a credit card.

However, if you don’t manage your finances responsibly, it can lead to more debt. In addition, personal loans may have additional fees and interest rates based on a variety of factors, including your credit score, credit report information (such as late payments or charges), loan amount and terms of the agreement.

Before you decide to take out a loan to pay off your credit card balance, consider the following factors:

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As an alternative to simply transferring your debt through a balance transfer or personal loan, you can use this strategy to tackle your credit card bill directly. You may also consider whether to pay off debt or save money first, perhaps setting a savings goal or adding a side hustle along the way.

If you have outstanding balances on multiple credit cards, you may want to start with the debt snowball method. This debt repayment strategy recommends that you pay off the card with the highest interest rate first, then switch to the card with the second highest APR.

By focusing on high-interest credit cards, you can avoid racking up more debt (in the form of interest charges) while trying to reduce your debt.

You can also try the snowball method when deciding which debt to pay off first. This repayment strategy allows you to pay off the card with the lowest balance first, eliminating debt from small to large.

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While both methods can help you pay off your card balances, the Snowball method allows you to build and maintain momentum as you pay off the debt on your list. [7]

Although you must make at least the minimum payment each month on your credit card, paying only that amount can keep you in debt for longer. Your credit card statement also comes with a warning about how long it will take to pay off the balance and how much interest you will pay if you only make the minimum payment. By finding ways to pay more than the minimum each month, you can eliminate debt faster and pay less in interest. [7]

While you can pay off credit card balances indirectly using a balance transfer, it doesn’t always make sense to do so. You may want to consider other methods that directly help you reduce your debt.

To help you get on the right financial path, we provide tools and information to help you understand how to build or rebuild your credit.

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Ana Gonzalez-Ribeiro, MBA, AFC® is a Certified Financial Advisor®, bilingual personal finance writer and educator dedicated to helping those in need of financial knowledge and guidance. His informative articles have been published in various outlets and websites, including the Huffington Post, Fidelity, Fox Business News, MSN, and Yahoo Finance. He also founded the personal finance and motivational website www.AcetheJourney.com and translated into Spanish the book Financial Advice for Blue Collar America by Kathryn B. Hauer, CFP. Ana teaches personal finance classes in Spanish or English on behalf of the W!SE (Working in Support of Education) program and conducts workshops for non-profit organizations in New York City.

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The speed of swiping (or clicking), ease of payment, and even the prestige of “platinum” or “Titan” cards are part of their appeal. Best of all, these shiny, sometimes colorful pieces of plastic offer discounts, rewards or miles when you shop.

But before you happily swipe, swipe, swipe (or tap, tap, tap), it’s important to know that when you use a credit card, you’re not actually paying out of pocket at the time of the transaction.

Unlike debit cards, where fees are deducted directly from your bank account, credit card fees are essentially short-term loans from the card company (like a bank) that must be repaid. As with any loan, interest is paid on the amount owed.

Also, if you pay your card bill in full before the due date,

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