How To Pay Off One Credit Card With Another: A Simple Guide

Paying off credit card debt can be tricky, especially if you don’t have enough cash on hand. A common question is whether you can use one credit card to pay off another. The short answer is yes, you can pay off a credit card bill with another credit card through balance transfers or cash advances. However there are some risks so make sure you understand the pros and cons before taking this approach.

An Overview of Paying Credit Card Debt With Another Card

Using one credit card to pay off another is known as a balance transfer or cash advance. With a balance transfer you move debt from one card onto a new card that ideally has a lower interest rate. With a cash advance, you withdraw cash from a credit card and use it to pay your bill.

Below are some key points about both options:

• Balance transfers – You open a new credit card with a 0% intro APR and transfer your existing balance onto it. This saves on interest, but watch out for balance transfer fees.

• Cash advances – You take cash out from one credit card to pay another. However, cash advance fees and high interest rates apply right away.

• Impact on credit – These options can negatively impact your credit score if not done carefully by increasing your credit utilization rate.

• Risk of going deeper in debt – It’s easy to overspend if relying on credit cards to pay off other cards. Make a plan to pay off the debt quickly.

Overall paying off one credit card with another should be done strategically and temporarily. It’s not a long-term solution.

When Does It Make Sense To Do This?

In some cases, it makes sense to use one credit card to pay off another card:

• You can get a lower interest rate – If you transfer to a 0% APR card, you can save substantially on interest while paying down the debt.

• You need more time to pay – If you can’t afford the minimum payment on your current card, a balance transfer or cash advance buys you more time.

• You want to consolidate debt – Combining multiple card balances onto one new card simplifies repayment.

• You have a short-term cash flow issue – If you’re temporarily short on cash but can pay off the balance soon, it can serve as a bridge.

However, it’s risky to do this if:

• You have poor credit and can’t qualify for a 0% APR card.

• You’ll end up deeper in debt and unable to pay off the cards.

• You’ll max out your overall credit limit.

As you can see, you need a plan to repay the debt quickly for this to be a sound financial move.

Step-By-Step Guide On How To Do It

If you’ve decided it makes sense to use a new credit card to pay off an existing card, here is a step-by-step guide:

1. Check your credit score

Before applying for a new credit card, check your credit score so you can qualify for the best terms. Shoot for a score over 700 if possible. Check your reports on Equifax, Experian, and TransUnion.

2. Research the best cards

Search for cards offering 0% intro APRs on balance transfers for 12-18 months. Compare balance transfer fees. Ask issuers if they’ll waive the fee.

For cash advances, find cards with no cash advance fees and low ongoing APRs.

3. Apply for a new card

Submit an application for the card you chose. Make sure the credit limit exceeds your existing balance. Get approved before moving forward.

4. Transfer the balance or get a cash advance

To do a balance transfer, provide the account number and amount to be transferred. For cash advances, withdraw funds from an ATM or bank.

5. Pay off the existing card

Use the proceeds from the new card to pay off the old card’s balance. Follow up to confirm the old balance is paid off and account is closed.

6. Pay off the new card responsibly

Make payments on the new card on time to avoid interest and fees. Pay more than the minimum when possible. Stick to your budget and pay off as much as possible during the intro 0% APR period.

Follow this process carefully, and you can successfully use a new credit card to pay off an old card while saving on interest charges. But make sure you have a plan to pay off the debt quickly and avoid overspending on the new card.

Answers To Frequently Asked Questions

Here are answers to some common questions people have about paying off credit card debt with a new credit card:

Can this negatively impact my credit score?

It can if not done carefully. Too many credit inquiries when applying for new cards can lower your score. Increase in credit utilization from balance transfers can also lower your score temporarily. Pay off balances quickly to minimize damage to your credit.

What are the risks?

The main risks are racking up more debt on the new card, damaging your credit, and incurring interest/fees if balances aren’t paid quickly. Avoid these risks by only using this strategy temporarily with a solid repayment plan.

Is a balance transfer or cash advance better?

Balance transfers are generally better because of intro 0% APR periods. Cash advance interest starts right away, so you lose the grace period. However, cash advances don’t require applying and qualifying for a new card.

What credit card issuers allow this?

Most major issuers like Chase, Citi, Capital One, etc. allow balance transfers and cash advances. Compare offers to find the best terms for your situation.

Can I transfer balances between cards from the same issuer?

Sometimes, but issuers often don’t allow within-brand balance transfers. You’ll likely need to transfer to a new issuer to avoid restrictions. Check the cardmember agreements.

How long will it take for a balance transfer to go through?

It can take anywhere from 5-10 days after requesting a balance transfer for it to go through. Continue making payments on your old card until the transfer is complete.

Alternatives To Paying Off Credit Cards This Way

While using one credit card to pay off another can be strategic at times, it does have risks. Here are a few alternatives to consider:

• Personal loans – Unsecured personal loans often have lower interest rates than credit cards. Shop around at banks/credit unions.

• Borrow from 401(k) – You can take a 401(k) loan with low interest that you repay over 5 years through payroll deductions.

• Credit counseling – Non-profit credit counseling agencies can help negotiate lower interest rates and consolidate debt.

• Debt management plan – Credit counselors can set up DMPs that formalize lower rates and monthly payments.

• Balance transfer checks – Some credit card issuers provide checks to transfer balances from other cards. This saves you from opening a new account.

• Debt consolidation with home equity – If you have sufficient equity, a home equity loan or line of credit can pay off credit card debt.

The best option depends on your specific financial situation. Explore all alternatives to find the right debt payoff solution for you.

Final Thoughts

Paying off one credit card with another via balance transfers or cash advances can be a reasonable strategy if done carefully for a limited time. But this tactic has risks, so weigh the pros and cons closely to decide if it aligns with your financial goals. Follow the steps above to do it successfully. However, also consider alternatives like personal loans or credit counseling. With the right approach, you can become debt-free faster!