How to Pay Credit Card Bill With Another Credit Card?
There is no direct way of paying one credit card bill through another credit card.
Credit card companies don’t allow you to make minimum monthly payments, or to pay off an outstanding balance, with another credit card from a different company. Oftentimes, the fees for these types of transactions are too high for the credit card companies to allow it.
But, if you do want to use a credit card to pay for another credit card’s bill, you can do that indirectly. There are 3 methods by which you could use your credit card to pay another credit card’s bill.
1. Through Cash
- Withdraw money from ATM for the credit card you want to make the payment with
- Deposit money into your checking account
- Pay the amount
- If you are going ahead with this method, do note that credit card loans are the most expensive loans there are. So, it might take a huge toll on your pocket.
2. Through an e-wallet
- Transfer the money to an e-wallet from the credit card you want to make the payment with
- Use the e-wallet to pay the amount
3. Through Balance Transfer
This is alternate way of paying one credit card’s bill through another. You can transfer your balance to another credit card and pay the bills on your other credit card. The interest rate of the other credit card would be lower than the former. Moreover, there will be an interest-free period during which you won’t have to pay any interest on the amount.
Points to note:
- Balance transfer usually comes with a fee
- It might affect your credit score a little
- If you miss a payment, you would be charged interest on the outstanding amount even if the interest-free period is not over
What Is a Balance Transfer?
As mentioned above, The only scenario where it makes good financial sense to pay off a credit card bill this way is if you’re shifting a credit card balance to one with a lower interest rate, especially to a card that has an introductory 0% APR offer. This is a balance transfer, and it’s the only time you can use one credit card to pay off another.
When you transfer a balance from a card that’s being charged interest to one that has no interest for a promotional period of time, you can save money. Here’s why.
Say you have a Rs 10,000 balance on a card that carries an 18% APR. If you do nothing for a year, you’ll have added an additional Rs 1,800 to your debt. If you transfer that balance to a card with an introductory 12-month 0% APR offer instead, you won’t be charged any interest for that year. But there are some nuances to the process.
What are the pros and cons of balance transfers?
Although it can be used as a way to help pay down debt, a balance transfer may not be the right move for everyone. Let’s take a look at some of the pros and cons of balance transfers.
- The 0% interest offer. The primary benefit of a 0% balance transfer credit card is the 0% introductory APR offer. This no-interest period means that your monthly payments during the promo period will go entirely toward the principal balance.
- Debt consolidation. Merging the balances onto a single balance transfer credit card will consolidate your existing debt and remove the inconvenience of making multiple monthly payments.
- Lower credit utilization. With a balance transfer, your total credit increases by the amount of credit on the new balance transfer card. Assuming you don’t incur any more debt, your utilization rate will go down as you continue to make payments.
- Balance transfer fee. Most credit cards will charge a fee for transferring a balance to their card. The fee is expressed as a percentage of the amount transferred and can range from as little as 0% to 5% or more.
- Ongoing APR. If the transferred debt is not paid in full before the intro 0% offer expires, the remaining debt will be subject to the card’s regular APR which could be even higher than the card you’re transferring from.
- Credit inquiries. Credit scoring formulas consider recent applications for new credit. While a single new credit card application likely won’t lower a score significantly, applying for multiple new credit lines can.
How to Do a Balance Transfer for a credit card?
There are a few steps involved in making a balance transfer. First, review your existing debt and determine how much interest you’re paying on any balances. Next, identify your goals.
When you’re seeking to shift your existing debt to a card with a lower rate, you will have to decide if you want a card with a limited-time promotional 0% APR offer, or if it makes sense to choose a card with a low ongoing interest rate. Make sure any card you’re considering offers enough time for you to make a serious dent in your debt, if not wipe it out completely.
When comparing different offers, pay attention to the terms surrounding a transfer. Be sure to calculate the cost of any balance transfer fees when deciding which balance transfer card is right for you.
Once you have picked a card, you can often request the balance transfer during the online application process. You’ll need to have the account number available of where you want to transfer debt from. Otherwise the application process is the same as applying for any other new card.
What to Consider Before Paying Off a Card With a Balance Transfer?
A balance transfer offer is not a one-size-fits-all solution to paying off a credit card. There are considerations to keep in mind.
Balance Transfer Fee
Balance transfer fees typically range from 3% to 5% of the amount being transferred. If you transfer Rs 10,000 to a card with a 0% APR offer but has a 3% balance transfer fee, you’ll add another Rs 300 onto your debt. It may make sense to choose a card with the lowest balance transfer fees possible.
That said, even if you must pay a balance transfer fee, it could still help you save money overall depending on how much debt you have, what your card’s interest rate is and how long you need to pay off your debt. It always makes sense to do the math for your personal situation before making a decision.
You Can’t Pay Off One Card Using Another Card From the Same Bank
Banks make money when you pay interest and other fees and generally won’t allow you to pay off one card using another card from the same bank. If you’re interested in a balance transfer offer, your best bet is to shift the balance from one bank-issued card to one with a 0% APR offer from a different issuing bank.
You can get around this restriction by using the balance transfer offer as a deposit to your checking account, then using that money to pay your credit card bill.
Your Credit Score Matters
Although a balance transfer offer may give you a option of paying down your existing debt, the best balance transfer offers are typically reserved for those with the best credit scores. If you’re new to credit or have a less-than-stellar credit history you might not qualify for a balance transfer card. Even those with excellent credit should be aware that every time you apply for a new line of credit, it can ding your credit score.
The 0% Period Will End
Eventually, that promotional interest-free period will come to an end. If you haven’t made much progress in paying off your debt, you could find yourself stuck paying an even higher ongoing interest rate. Before you transfer a balance to a new card, make sure that you’ll be able to pay it off within the 0% APR period.
You Don’t Know How Much Credit You’ll Get
If you’re looking to transfer $10,000 in debt, there’s no guarantee you’ll be approved for that amount on a new card. If you’re looking for the longest runway possible to pay down your debt, and the amount you’re approved for falls short of what you’re looking to transfer, then you’re stuck with two card balances to keep track of and make payments on.