In most cases, you cannot use the funds from one credit card to settle the debt on another. You can't use another credit card to settle your credit card debt with a bank. Usually, the only acceptable payment methods are checks, wire transfers, or money orders.
One such exception is a credit card that allows you to transfer your debt. Keep reading to find out about the one time it's acceptable to use a credit card to pay off another credit card.
Credit Cards Should Not Be Used to Pay Credit Cards
As was previously indicated, you can only pay your credit card bill by charging it to another card if you initiate a balance transfer. However, even if they did, it would be unwise to try to solve one country's debt problem by adding to the problem another. Your credit score and financial stability might hit if your debt burden is too large.
What Exactly Is A Balance Transfer?
Only transferring a balance to a credit card with a reduced interest rate, especially one with a 0% APR introductory offer, makes paying off a credit card amount in this manner a beneficial financial move.
A balance transfer is the only way to pay off one credit card with another. A great way to save money is to move your balance from a high-interest credit card to one with a 0% APR promotional term. And here's why.
Let's pretend you're carrying a $10,000 balance on a card that charges an APR of 18%. To pay off the debt in a year, you would need to make payments of around $916.80 for a total interest expense of roughly $1,001.60.
A Step-by-Step Guide to Balance Transfers
Making a balance transfer requires a few simple actions on your part. The first step is to take stock of your current debt and interest rates. Goals need to be established next. When transferring existing debt to a card with a lower rate, you will need to evaluate whether a promotional 0% APR offer is worth it or whether a low continuing interest rate is more appropriate. Make sure the credit card you choose gives you at least enough time to pay off your balance in full.
How To Determine If A Balance Transfer Is Right for You
An introductory balance transfer promotion is not a one-size-fits-all option for paying off credit card debt. In this regard, there are things to think about.
Cost of a Balance Transfer
Typically, balance transfer costs are between 3% and 5% of the transferred amount. A balance transfer from $10,000 to a card with 0% APR will result in an additional $300 in debt because of the card's 3% balance transfer charge.
Choose a card with the lowest transfer fees if you want to transfer a balance. However, depending on the total amount of your debt, the interest rate on your card, and the length of time it will take you to pay it off, even if you must pay a balance transfer charge, it may still help you save money in the long run.
You Can't Pay Off One Bank Card With Another
Banks profit from interest and other costs, so they often won't let you use a different card from the same bank to pay off a balance on a card from the same bank.
Transferring a balance from one bank-issued card to another with a 0% APR offer from a different issuing bank is your best chance if you're looking at balance transfer offers.
To get around this rule, you can deposit the balance transfer offer into your checking account and then use that money to pay off your credit card.
Your Credit Score Is Crucial
You may start paying off your debt by taking advantage of a balance transfer offer. Still, the greatest offers are usually reserved for individuals with excellent credit. You may not be approved for a balance transfer credit card if you are new to credit or have a less-than-stellar credit history. If you have good credit, you must know that applying for new credit will lower your score.
There's No Way to Know How Much Credit You'll Get
There is no assurance that you will be granted a transfer of $10,000 in debt to a new credit card. If the amount you're authorized for is less than the amount you're hoping to transfer, you'll have to continue keeping tabs on and making payments on two separate credit card balances as you work to pay off your existing ones.
