When you pay your credit card bill with another credit card, you're making a balance transfer -- transferring your debt from one card to another. If you're short on cash, this might be your only viable short-term strategy. But transferring balances can affect your credit, so you need to carefully evaluate the potential risks first.
Check the Payment Basics
If you're paying one card with another, you might have to pay a balance transfer fee -- usually around three to five percent of the amount being transferred. Aside from the additional fees, there's nothing unusual about paying one card with another. You can pay using your usual payment method -- by phone, Internet or mail -- but if the card you're paying is a new account, you might have to set up a payment account prior to paying online. Plan to pay a few days early in case you have to wait for verification information to pay online.
Understand the Role of Interest
When you pay one card with another, consider which card has the higher interest rate. Transferring your balance to a lower interest card can help you pay down your debt faster. If you're simply desperate to pay a credit card bill and end up using a card with a high balance to do so, your debt will accelerate more quickly. Try looking for a credit card that comes with a 0% introductory APR for 12 to 18 months. Many well-known credit card companies offer this special rate for new customers, and that may buy you the time you need to catch up on your credit card debt.
Consider Your Credit Health
If your cards are close to their limit, it can harm your credit. When you transfer balances, make sure this doesn't drive one card close to or over the set limit. You may also have to begin making larger minimum payments on the card to which you transfer the balance, particularly if you transfer a lot of money. If you miss these payments, your credit will suffer. Further, if you only make the minimum payments, it's unlikely that you'll pay down your debt.
Manage the Old Card
If you're transferring your balance because you hate your old credit card company, it might be tempting to cut the card up and cancel the account. Doing so can negatively affect your credit. Your credit score is partially based upon the amount of your credit card debt as a ratio of your total available credit, so it's a better idea to leave the account open and just not use the card.
- Discover: 0 APR Balance Transfer Credit Cards -- What You Need to Know
- CreditCards.com: 9 Things You Should Know About Balance Transfers
- Bank of America: Making Payments
- Bankrate.com: Should You Use a Balance Transfer Credit Card to Pay Down Debt?
- MyFICO: What's in my FICO Scores?
- Discover: Can You Pay One Credit Card off With Another?
- Mastercard: 0% APR Credit Cards
- Federal Trade Commission. "Credit Card Accountability Responsibility and Disclosure Act of 2009—Sec. 171. Limits on Interest Rate, Fee, and Finance Charge Increases Applicable to Outstanding Balances." Page 6. Accessed Nov. 2, 2020.
- Experian. "How a Balance Transfer Affects Your Credit Score." Accessed Nov. 2, 2020.
- Experian. "What is a Credit Utilization Rate?" Accessed Nov. 2, 2020.
Van Thompson is an attorney and writer. A former martial arts instructor, he holds bachelor's degrees in music and computer science from Westchester University, and a juris doctor from Georgia State University. He is the recipient of numerous writing awards, including a 2009 CALI Legal Writing Award.