When paying a credit card, you generally have one option: To pay via your bank account. In the most basic sense, you can’t log on to your credit card account online and pay down your balance with another credit card — at least not typically.
You can, however, use another credit card‘s features, like cash advances and balance transfers, to pay down other credit card debt.
Below, we’ll explore the ways you can pay a credit card with a credit card and review whether it’s worthwhile.
Most credit cards offer a portion of your available credit as a cash advance, meaning you can go to an ATM and remove cash — just like you do with a debit card. You can use this feature to pay down other credit cards by taking out the cash, putting that cash in your checking account, and paying your credit card bill with that checking account.
Here are some of the nuances of getting a credit card cash advance.
Your cash advance APR is typically higher than your standard purchase annual percentage rate (APR), which is the interest the credit card company charges you. So, if you have a 19.99% purchase APR on your credit card, your cash advance APR may be 25.9%. Credit card companies rarely offer any type of cash advance specials, like low interest.
Cash advances not only come with higher interest, but they also come with a fee. This fee typically ranges between 3% and 5%. That may not seem like much, but it can add up. For example, a $5,000 cash advance would result in a $150 to $250 cash advance fee.
Unless you run into the rare instance of a cash advance special, like low or no APR, cash advances are typically not suitable for paying off other credit cards. Not only is it a time-consuming task to withdraw the cash then deposit it in the bank, but it’s also costly due to the high fees and higher interest rate.
Most credit cards also offer the ability to transfer one credit card balance to another via a balance transfer. These balance transfers work online and via a paper check.
For the online method, log in to your credit card account online and find the “Balance Transfer” section. Here, it’ll outline the terms of the transfer. Once you accept the terms, you can enter the credit card number for the card you’d like to pay off and the amount.
Once you submit that data, the credit card company will send a payment to the other credit card company. Depending on the credit cards involved, this process may be immediate or may take a few days to proceed.
Balance transfer credit cards also often send out blank paper checks to use for transferring a balance. Simply make the check out to the credit card company you want to transfer to and the amount you wish to transfer, then mail the check in with your payment voucher. Alternatively, you can make the check out to yourself, deposit it in your bank account, and make the payoff with your bank account.
Here are some things to be aware of when considering using a balance transfer credit card to pay off another credit card.
Typically, the balance transfer APR is the same as your purchase APR, though each credit card company will vary. However, there are frequent balance transfer promotions that offer lower interest rates and save you big money. In some cases, these promotions are 0% APR for 6-18 months.
Some credit card companies offer these low rates as intro promotions to attract new customers. Credit card companies will also sometimes offer them to existing customers to entice them to use the card.
Transferring that high-interest-rate credit card debt doesn’t come free, though. Most credit card issuers will charge you for transferring a credit card balance. This balance transfer fee is generally 3% to 5% of the total balance you transfer. So, if you transfer $2,000, you can expect a $60 to $100 fee.
While the balance transfer fee may be the most immediate concern when opting for a 0% APR balance transfer credit card, there are other fees to consider, including the annual fee, if applicable.
So, when calculating the balance transfer fee and comparing it to the interest you’ll pay, also add the annual fee, if applicable, into the mix to determine if it’s worthwhile.
This depends on several variables, starting with the APR. If you received a 0% APR offer for a specific period, using a balance transfer to pay off a credit card is generally a wise move. Sure, you will pay the balance transfer fee, but that’s generally far less than you’d pay for interest during the promotional period.
For example, if you have a $5,000 balance on a 19% interest credit card, you’d pay approximately $950 in interest over 12 months. If you did a balance transfer with a 5% fee and a 12-month 0% APR promotion, you’d pay only a $250 fee and no interest for that same one-year period.
Before choosing to use a balance transfer credit card to pay off another card, calculate the balance transfer fee and compare it to the interest you’ll pay on your current card during the promotional term to determine if it’s a good deal.
When used wisely and with a concrete plan in place, balance transfer credit cards can play a key role in becoming debt-free. Here is how balance transfer credit cards can work to your advantage when paying off debt.
No matter which debt repayment scheme you prefer — the debt avalanche, debt snowball, or a different one — 0% interest means 100% of your monthly payments, even the minimum payments, will go toward the principal balance. This means you’ll get out of debt quicker and save money.
Balance transfer credit cards with 0% APR also allow you to better estimate the credit card payment amount you must make each month to be debt-free within a specified period.
If you transfer $1,000 in debt and incur a $50 fee, and you wish to be debt-free by the time the 12-month 0% promotion ends, simply divide the total balance ($1,050) by 12 to determine how much to pay per month to pay off the debt in full.
With standard credit card interest, your personal finances can become complicated because you must perform complex calculations or use an online calculator to estimate the amount to pay each month to be debt-free by a specific time.
If you have heavy credit card debt that will take multiple years to pay off, you can still use balance transfer credit cards to your advantage.
In this instance, transfer as much of your high-interest balance to your balance transfer credit cards as your credit limit will allow. Remember to factor in the balance transfer fee when calculating the transfer so you don’t exceed the credit limit.
Continue your debt repayment plan, but about a month or two before the 0% introductory period ends, start searching for a new card with a 0% APR balance transfer offer. When you find a new one, transfer the balance from the balance transfer credit card with the expiring promotion to the new credit card.
This process has a few downsides, starting with the need for a good credit score and favorable credit report to get approved for multiple 0% APR balance transfer credit cards. Second, taking out a new 0% APR balance transfer credit card may slightly lower your FICO credit score. Third, you will incur another balance transfer fee.
While you can’t exactly enter your credit card number as a form of payment, you can use a credit card to pay another one via its cash advance and balance transfer features. But of the two, the balance transfer option is more beneficial when trying to become debt-free.
Suppose you have access to a 0% APR balance transfer credit card. In that case, it can streamline your debt repayment process by minimizing interest charges, maximizing your minimum monthly payments‘ impact on the principal balance, and offering a clearer path to becoming debt-free. Plus, if you need more time at 0% APR, you may be able to roll your balances from one 0% APR card to another.
Another option is to pay your credit cards using the Tally app. Tally will manage your credit cards for you, making sure you never miss a due date. Plus, instead of juggling multiple cards and payments, you’ll only have to pay one bill each month.