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You may be struggling to make payments on your credit card and are wondering can you pay a credit card with a credit card. While you can’t directly pay your credit card bill by entering the credit card number of a different card as payment, you can indirectly pay a credit card with a credit card via a cash advance or balance transfer.
However, some of these options are risky and may lead you to fall into expensive debt. Depending on your circumstances, there may be alternatives to using a credit card to pay a credit card, such as taking out a personal loan. We’ll review all the options you have for paying a credit card with a credit card, as well as what to look out for and possible alternatives.
When you borrow cash against your line of credit on your credit card, you are taking out a cash advance. The money you borrow can be deposited into your checking or savings account and used to make payments toward your credit card.
What to watch out for:
- High interest rates: Cash advances typically come with interest rates near 30%.
- No grace period: You are charged interest starting from the date you took out your cash advance.
- Limits on how much cash you can withdraw: There is a seperate cash advance credit limit that’s often lower than your overall credit limit.
- Several fees: You may be charged a fee (typically 3% or 5%) for taking out a cash advance and a small fee (typically $2.50 or $5) if you use an out-of-network ATM to withdraw the cash.
A balance transfer is when you transfer debt from one credit card to another card with a lower interest rate. Ideally, you transfer the balance to a card offering a 0% introductory APR period for balance transfers. During the 0% intro APR period, your transferred balance won’t accrue interest, and you can typically save a good deal of money on interest payments you’d typically incur if you left your debt on a high interest credit card. There are many balance transfer credit cards that offer 0% intro periods ranging from 12 to 21 months, providing a good amount of time to pay off credit card debt.
What to watch out for:
- Credit requirements. Balance transfer offers generally require the applicant to have good or excellent credit.
- Bank options. Balance transfers can only be completed between cards from different banks. For example, if you have a balance on a credit card from Bank A, you can’t transfer it to a different credit card from Bank A. It must be transferred to a credit card from a different bank such as Bank B, C, D, etc.
- Cards offering balance transfers typically charge balance transfer fees. These fees are usually 3%-5% of the amount you transfer, but there are some cards with intro $0 balance transfer fees.
- Limited-time offers. Most issuers impose a 30- to 60-day time period from date of account opening, during which you have to transfer your balance in order to receive the 0% intro APR offer. Don’t let too much time pass and miss out on the offer.
- Transfer limits. Credit card issuers typically limit the amount you can transfer to a percent of your credit limit or a specific dollar amount. And transfers can’t exceed your available credit limit, including any fees associated with the transfer.
- Deferred interest. If you continue to carry a balance once your intro period ends, you may incur all the interest charges accrued during the intro period. However, it’s rare that cards from the major issuers charge deferred interest.
Alternative: Personal loans
A personal loan may be a better alternative if you’re someone with less than perfect credit looking to borrow money long term to pay off credit card debt. Many personal loans offer longer terms than balance transfer credit cards, with terms up to 84 months and potentially lower interest rates than cash advances. If you decide to open a personal loan, check out MagnifyMoney’s tool where you can compare personal loan offers. (Disclosure: MagnifyMoney is owned by LendingTree, which also owns CompareCards.)
What to watch out for:
- Varying interest rates. The interest rate you qualify for (if you can qualify for a loan) will depend on your credit. So, if you have a low credit score you most likely will receive a higher interest rate than someone with an excellent credit score.
- The lender may charge an origination fee when you take out the loan. This fee is nonrefundable and deducted from your total loan amount.
Helpful tips to avoid paying a credit card with a credit card
If you don’t want to use another credit card to pay off your credit card debt, there are several other debt consolidation alternatives beyond taking out a personal loan. You can also take out a home equity loan (HEL), home equity line of credit (HELOC) or a 401(k) loan. Each option has its pros and cons.
For example, HELs and HELOCs are secured by your home, so if you default on your loan, your home may face foreclosure. While HELs and HELOCs may offer relatively low interest rates, they also come with closing costs. And with 401(k) loans, you must stay at your current job until your loan is paid in full or risk penalties and owe the remaining loan balance within 60 days of your last day of employment. On the other hand, you’re borrowing money from yourself, and the interest rate is lower than standard credit card APRs.
There’s another alternative if you’re in a serious amount of debt and don’t know where to begin — a debt management plan (DMP). These plans consolidate your credit card payments so you only make one payment toward your DMP, and your counselor will distribute that payment to your various debts. While DMPs can be helpful, there may be fees, and you may have to waive the ability to use a line of credit while you’re enrolled in the plan. You can learn more about DMPs through the National Foundation for Credit Counseling (NFCC).
How to avoid falling back into credit card debt
If you struggle to make your minimum payment or pay your credit card bills in full, following the steps below may help you avoid falling into debt.
- Don’t spend more than you can afford to pay. A good rule of thumb is to either limit spending to what you can afford to pay at your statement due date or what you can afford to pay at the time of purchase. With credit cards, we recommend keeping spending to 30% of your available credit limit. That means if you have one credit card with a $2,000 credit limit, spend less than $600 before paying off the balance.
- Pay on time and in full. Payment history is the most influential factor in your credit score. Therefore, it’s key to pay each statement on time and in full so you avoid falling into debt and being charged late fees and penalty interest rates.
- Set up an emergency fund. An emergency fund can be as simple as setting aside $1,000 for unexpected expenses that may arise. You determine how much you want to put in the fund and where you put it, but just remember it should be relatively easy to access so you can quickly use it to pay bills — that means opt for a checking or savings account over putting it in a CD. With emergency savings on hand, you won’t have to put an unexpected expense on your credit card. Just make sure to only use it for emergencies, not a way to cover overspending.