Your debt is stacking up, and you may’t make the minimal funds in your credit card invoice. You’re operating out of choices…when, gleaming from the depths of your pockets, you see a totally different credit card.
Or perhaps you’re planning a massive journey, and are hoping to earn the mandatory factors by paying for all the pieces — together with your different credit card payments — with your rewards card.
In both state of affairs, you’ve the identical query: Are you able to pay a credit card with a credit card?
How Do You Pay a Credit Card With One other Credit Card?
The quick reply: You may’t. At the least most likely not in the best way you’re pondering. You may’t simply log in to your Uncover account and pay your invoice by typing in your Amex quantity, and that’s true for many if not all issuers.
You may, nevertheless, pay your credit card with a credit card in two different methods: with a money advance (which we don’t advocate), or by transferring your steadiness to one other card.
Money advance or comfort verify
We’re going with the worst methodology first.
You already know these “convenience checks” your card issuer sends within the mail? You might both money a kind of — or use your card to take a money advance from the ATM — then deposit the cash into your checking account and use it to pay your invoice.
Whereas it sounds straightforward, it’s a dangerous concept. Money advances are costly: They often come with charges of up to 5% of no matter you withdraw, and so they instantly begin accruing curiosity prices (usually at a fee of round 25%).
When you took out $1,000, for instance, you’d owe about $70 in charges by the top of the month, and that quantity would proceed to improve every day till you paid off your debt.
A greater different? Pay your credit card with a steadiness switch.
Similar to they sound, these contain transferring half or all your steadiness from one credit card to one other. You might, for instance, switch the steadiness out of your Chase card to a new card from Citi. You often can’t switch balances between playing cards on the identical financial institution.
Steadiness transfers might be a gorgeous choice when the brand new card has a decrease rate of interest (APR) than your present card. Actually, many steadiness switch playing cards provide 0% curiosity on transferred balances for a sure time interval.
Not solely can steadiness transfers tide you over when cash is tight, however they will additionally present an efficient manner to quickly keep away from paying curiosity on the credit card debt you have already got.
5 Issues To Know About Steadiness Transfers
Listed here are a few issues you must learn about transferring a steadiness.
1. They’re not free
While you switch a steadiness to a new card, that card’s issuer will often cost a payment that’s 2-5% of the steadiness transferred. So, should you switch a $1,000 steadiness, you possibly can owe between $20 and $50 in charges, which the issuer often provides to the brand new steadiness.
Just a few playing cards, nevertheless, don’t cost steadiness switch charges should you full the switch inside a sure interval of opening the card.
2. They might prevent curiosity
Though it comes with charges, transferring a steadiness may finally prevent cash should you’re paying a excessive rate of interest in your credit card debt.
Let’s say you’ve one card, cleverly named Card A.
- Steadiness: $10,000
- APR: 18%
- Minimal cost: $400
When you simply make the minimal month-to-month funds on Card A, it’d take you greater than 13 years and nearly $6,000 in curiosity earlier than you pay it off. Not cool.
However you then get a steadiness switch provide within the mail for a new card: Card B.
- APR: 0% for 18 months
- Steadiness switch payment: 3% of the steadiness transferred
When you switch your $10,000 steadiness from Card A to Card B, it’ll value you $300 in charges. However should you handle to pay $572 monthly on Card B, due to this fact paying off the whole steadiness earlier than the introductory APR ends, you received’t pay any curiosity.
In different phrases? After the steadiness switch payment, you’ll have saved $5,700.
3. Their low APRs received’t final without end
Most playing cards designed for steadiness transfers have a low introductory APR — usually 0%. The interest-saving technique above works finest should you pay off your full steadiness earlier than the introductory interval ends.
After the intro interval is up (usually round 12 to 18 months), your card issuer will begin charging a common rate of interest — which may very well be as excessive as 18-22% or extra. So should you don’t pay off your steadiness by that time, you’ll be in the identical boat you had been earlier than.
As with any card, it’s additionally important to pay each invoice on time. Only one late cost may set off the credit card issuer to finish your intro APR interval. That might depart you with an additional excessive penalty APR of about 30%!
When you can’t pay off a steadiness within the specified time interval, you might give you the option to make one other switch to a totally different low-interest card. The higher your credit, the extra probably you’re to qualify for these provides. That stated, you’ll have to resolve if one other switch is definitely worth the charges.
4. They contemplate your credit
A steadiness switch card is rather like some other credit card; it’s simply referred to as that as a result of it has options like low APR or low charges that make it enticing for steadiness transfers.
So whenever you apply for a steadiness switch card, the card issuer will carry out a arduous inquiry in your credit stories to see should you qualify. For the very best steadiness switch playing cards, you’ll want robust credit scores to get authorized.
If in case you have dangerous credit, sadly, you may not qualify for any steadiness switch provides — wherein case you’ll have to attempt one of many options talked about beneath.
Additionally value noting: Steadiness switch playing cards come with a credit restrict that’s primarily based in your creditworthiness. In some circumstances, this new credit restrict received’t be sufficiently big for you to switch your full credit card steadiness out of your authentic card. Some issuers may set limits on how a lot debt might be transferred.
5. They might sign different monetary points
Though steadiness transfers might be a savvy monetary software when used appropriately, they may also be a signal of dangerous monetary habits.
Emergencies occur to all of us, however should you’re usually scrambling for methods to pay your payments, it could be time to take a crucial take a look at your funds.
Right here’s one state of affairs you undoubtedly don’t need to find yourself in: transferring your steadiness from Card A to Card B, after which racking up further debt on Card A.
When you’re nervous about dropping management, you possibly can reduce up Card A and delete its quantity from any saved on-line accounts. You might additionally shut the card, however that can cut back your accessible credit — and will due to this fact decrease your credit scores.
Can You Pay a Credit Card With a Credit Card With out Paying a Charge?
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When you use a steadiness switch card with a 0% APR provide and no steadiness switch payment, and you find yourself paying the complete steadiness earlier than the introductory APR provide expires, the whole course of might be completely free. However you’ll be charged curiosity beginning when the introductory provide ends should you can’t pay the steadiness inside that timeframe.
Bank cards with out steadiness switch charges are typically arduous to come by, however even should you’re caught paying a switch payment, you’ll probably find yourself paying a lot lower than should you’d paid the steadiness with a money advance.
Can You Pay a Credit Card With a Credit Card To Get Factors?
We’ve acquired some dangerous information for all you factors junkies on the market: Sadly, you sometimes can’t earn rewards when transferring a steadiness.
So should you’ve already signed up for a new card and are attempting to meet the minimal spend, contemplate paying your lease with a credit card. Though you’ll pay charges, it may assist you to snag that profitable bonus.
Alternate options to Paying a Credit Card With a Credit Card
Whereas steadiness transfers work in sure conditions, they’re not your solely choice.
Listed here are some other ways to pay off credit card debt:
Since they usually have decrease rates of interest than credit playing cards, it typically is smart to use private loans to pay off credit card debt.
When you pay off a number of playing cards with one private mortgage, you’ll additionally consolidate a number of statements and due dates into one month-to-month invoice. And, as a result of private loans are “installment loans” — slightly than “revolving” like credit playing cards — this method may enhance your credit scores, too.
Dwelling fairness loans
For householders with some fairness of their mortgage, a little-known technique is to pay your credit card with a residence fairness mortgage (HELOC).
If going this route, proceed with excessive warning. Paying a credit card with a HELOC means placing up your own home as collateral to your debt — which suggests you possibly can lose your own home over missed funds.
0% APR credit playing cards
As an alternative of transferring Card A’s steadiness to a new card — and due to this fact paying steadiness switch charges — you possibly can open up a 0% APR card (Card B) and cost your on a regular basis bills to it.
Then, after making simply the minimal cost on Card B, you possibly can use the money you’ve freed up to pay off Card A (and its larger rate of interest).
As with the HELOC methodology, this technique comes with threat. It’s best to solely pursue it if you’ll pay off the 0% APR card earlier than its introductory interval is over. In any other case, you’ll find yourself in a worse state of affairs than you’re in now.
Debt avalanche or debt snowball
These are two totally different debt payoff methods:
- Debt avalanche: Repay your loans so as of rates of interest, from the mortgage with the best curiosity (most likely your credit card) to the bottom curiosity (most likely your mortgage or pupil loans).
- Debt snowball: Repay your loans so as of steadiness owed, from the mortgage with the bottom steadiness to the mortgage with the best steadiness.
Prepared To Pay a Credit Card With a Credit Card?
Be accountable with your steadiness switch: Make on-time funds in your new card, and try to pay off the steadiness earlier than the intro APR interval ends. When you preserve your previous card open, don’t put any further prices on it.
Paying a credit card with a credit card might be useful in a pinch — so long as you are taking steps to keep away from falling deeper into credit card debt.
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