If a credit card company even allows this, you could face incredibly steep interest rates, and it can be even more challenging for you to pay off your balances in the long run.
There are two main strategies for paying off your credit card without using another card. These include a balance transfer card or a cash advance. Read on to learn more about the advantages and disadvantages of each, as well as a list of alternative methods for reducing your credit card debt.
Can you pay off a credit card with another credit card?
While it is possible to pay off a credit card with another credit card — whether that’s paying the minimum monthly payment or the entire balance — most credit companies don’t allow it. This is because when you do this, you’re just transferring your debt back and forth as opposed to actually settling it.
There are two alternative methods for paying off your credit card without using another card: apply for a balance transfer or take out a cash advance.
What is a balance transfer?
A balance transfer card shifts your debt onto a new card with a lower annual percentage rate (APR), so it becomes a bit easier to pay off what you owe.
The money placed on your balance transfer card must be below your current card limit. So, if your present credit card limit is $2,000, you can only transfer that amount onto your new card.
3 pros of balance transfers
Some of the benefits of choosing a balance transfer card include:
One: Interest-free introductory periods. Introductory periods — which allow you to bypass paying interest on your new card balance — typically last around 12 to 18 months. They’re one of the most significant perks of a balance transfer and give you a better chance of reducing your within this time frame.
Two: They can save you money. Extending off point number one, lower intro APR fees and lower interest rates mean you’ll be able to save a little more money, too.
Three: Better rewards programs. Some balance transfer cards act as rewards cards and offer cash back or travel package incentives, making both your daily spending and paying off your monthly credit card bill less of a burden.
2 cons of balance transfers
Even though balance transfer credit cards are often the recommended first step when you’re looking for ways to manage your debts, it’s still not a perfect strategy, and you shouldn’t rely on this as a permanent solution.
One: Transfer fees. Banks charge you a balance transfer fee. Unfortunately, the associated costs can be quite steep.
Two: You could be declined. Most financial institutions prefer that you have a credit score of 670 or higher in order to obtain a balance transfer. Bad credit history and a low score can prohibit you from successfully initiating a balance transfer.
What is a cash advance?
A cash advance uses your credit card to withdraw funds from your savings or checking account. Simply put, it’s a “cash-now loan.” To do this, you’ll have to pay a fee.
Usually, you can only take out as much money as your available credit limit. Cash advances can help you pay off your minimum payments, but if you need funds to pay off a larger balance, you’ll have to take out multiple cash advances at another time.
Once you obtain the advance, you must deposit it into your account order or convert it into a money order to send it to the credit card issuer.
2 pros of cash advances
Remember, a cash advance isn’t a permanent solution to your problem, but it can be a temporary one. Listed below are a few advantages of taking out a cash advance.
One: Ease. All you have to do is go to your local bank branch and slip your card in the ATM or go up to the counter and have a clerk assist you to obtain a cash advance.
Two: Speed. You’ll be able to access the money quickly, enabling you to pay off your mounting debt faster as well, which can help you avoid further interest charges.
3 cons of cash advances
Experts don't recommend taking out a cash advance unless you absolutely have to.
One: It's expensive. Consumers face a high interest rate of approximately 2 to 5 percent when they request a cash advance. There’s roughly a total of 24 percent in fees over the lifespan of the cash advance, which is nearly 10 times higher than a standard APR. Whatever you withdraw will also incur interest, and you must make efforts to pay off both of these things during each billing cycle.
Two: There may be additional fees. Alongside the fee for the advance itself, depending on the card, you may be subject to extra costs like withdrawing from your bank account, ATM fees, or a processing fee.
Three: It may not solve your problem. You’re just transferring money from one source to another instead of paying off your debt.
2 alternatives to credit cards
If you aren’t comfortable applying for a balance transfer card or a cash advance, don’t worry — there are other ways to pay off your debts, including:
One: Debt consolidation. Debt consolidation is when you take out a single, low-interest loan to pay off several smaller loans. Ultimately, you’re amalgamating your debts and paying them off with a combined monthly payment. This makes the process of settling your debts a lot simpler.
Banks and credit unions are the financial institutions that often approve this venture.
Two: Credit counseling. Seeking help from a professional through a credit counseling agency is another smart way to go. A professional can help you develop a personal finance plan.
The bottom line
One of the best ways to solve a credit card payment issue is to commit to better spending habits. Surrounding yourself with the right tools is crucial, and one intelligent tool to help you keep your debt in check is Point Card. Because it isn’t a credit card, Point prevents you from spending money that you don’t have.
Designed as a transparent, easy-to-use alternative payment card, Point allows cardholders to exercise fiscal independence while also growing their wealth. You’ll have the freedom to spend your own money as you see fit, all while receiving exclusive benefits. This includes unlimited cash-back and bonus cash-back on subscriptions, food delivery, rideshare services, and coffee shop purchases.
Point also comes with multiple measures to help protect your wealth. Car rental and phone insurance, travel cancellation insurance, fraud protection with zero liability, two free ATM withdrawals every month, and no interest fees are just a few of those features. You won’t have to worry about unnecessary costs and can focus on what matters, whether that’s saving for a new home, a vehicle, or your dream vacation.
You work hard for your money, and Point works equally hard for you in return.
Made to spend.