Juggling credit card debt can feel like an uphill battle, especially when high interest rates keep balances from shrinking. Many people wonder if they can outsmart the system by paying off one credit card with another. While you can’t make a direct payment this way, certain strategies allow you to move debt between cards. I’ll discuss these strategies, including the risks involved, to help those who have huge credit card debts make a better decision and see if they’re worth using or not.
How to Pay One Card with Another
Credit card issuers do not allow direct payments from one card to another. However, two common methods can help move debt from one card to another: balance transfers and cash advances. While both options provide a way to consolidate or pay off debt, they work differently and come with their risks.
How Does a Balance Transfer Work?
A balance transfer lets you shift debt from one credit card to another, ideally one with a lower interest rate. Many issuers offer 0% APR promotions, giving cardholders a temporary break from interest. These offers typically last between 6 to 15 months, creating a window to tackle debt without extra costs piling up.
A balance transfer can make debt repayment easier by combining multiple balances onto a single card with a lower interest rate. This simplifies tracking payments and reduces financial strain. With less interest accumulating, more of your money goes toward the actual debt rather than fees.
What to Consider Before Doing a Balance Transfer
While a balance transfer can provide relief from high interest, it is not always a cost-free solution.
Most credit card issuers charge a balance transfer fee, typically between 3% to 5% of the transferred amount. This fee should be factored into the total cost before deciding if a balance transfer is the right move.
Another important consideration is the APR after the promotional period ends. If the balance is not paid in full before the 0% APR period expires, the remaining debt will be subject to the card’s regular interest rate. Depending on the issuer, this rate can be quite high, making it essential to have a repayment plan in place.
Additionally, balance transfers can impact credit scores. Opening a new credit card or maxing out an existing one increases credit utilization, which may temporarily lower your score.
Cash Advance (Not Recommended)
Grabbing a cash advance to pay off credit card debt might sound like a quick solution, but it comes with some serious downsides. It’s basically borrowing cash from your credit card to cover another balance, but here’s the catch—cash advances usually have much higher interest rates, and they start racking up interest the second you take out the money. There’s no grace period like you’d get with regular purchases.
Before going this route, take a moment to compare the cash advance interest rate with what your credit card company will charge if you just leave the balance unpaid for another month. If the regular interest is lower, it might be worth holding off and using that extra time to look for a better way to tackle your debt.
The interest rates on cash advances are much higher than standard purchase rates. It often exceeds 20%, making them an expensive borrowing option. This can quickly increase overall debt, especially if repayment is delayed.
Pros and Cons of Paying a Credit Card With Another
Before using one credit card to pay off another, consider the potential advantages and risks to make an informed decision.
Advantages
- Lower interest rates – Moving debt to a lower-interest card can cut down on overall costs, allowing faster repayment.
- Simplified payments – Combining multiple balances into one simplifies tracking payments and staying on top of debt.
- Temporary financial relief – If you’re struggling with high-interest payments, a balance transfer provides breathing room to focus on reducing debt.
Disadvantages
- Risk of accumulating more debt – If the old credit card continues to be used, total debt could increase instead of decrease.
- Potential credit score impact – Opening a new credit card or pushing an existing one to its limit can negatively impact your credit score.
- Balance transfer fees and post-promo APR – If the balance isn’t fully repaid before the promotional period ends, higher interest rates will apply.
Smart Alternatives to Consider
For those who want to pay off credit card debt without using another card, several options can be explored:
- Debt snowball or avalanche method – The debt snowball method builds momentum by paying off the smallest balances first, while the avalanche method minimizes interest by prioritizing high-cost debts.
- Negotiating with credit card issuers – Some lenders may offer lower interest rates or hardship programs for struggling borrowers.
- Taking out a low-interest personal loan – Those with good credit can use a personal loan to consolidate debt, securing a fixed monthly payment and avoiding high credit card interest rates.
Making the Right Financial Choice
If you’re drowning in credit card debt, a cash advance should be the last thing on your mind. No one in their right mind would tell you to go that route, it’s like jumping from the frying pan into the fire. A balance transfer can be a smart move, but don’t forget there are plenty of other ways to raise funds and pay off debt that don’t involve shuffling money from one card to another.
I get it, moving debt around feels like buying yourself some breathing room, and sometimes it does help. But balance transfers only work if you have a game plan. Without a solid strategy to pay down what you owe, you might just be kicking the can down the road instead of making real financial progress.