How to Pay a Credit Card Bill from Another Credit Card
Today, credit cards have emerged to be an important tool of your finances. But can you pay a credit card bill from another credit card? It’s a common question during financial crunches.. It offers rewards, convenience, and flexibility in covering any expense you might want to have. However, another essential question is whether one Pay a Credit Card Bill from Another Credit Card. Though most people rely on debit cards, UPI apps, or bank transfers to clear their credit card dues, the idea of using another credit card sounds beneficial to some in financially stressful times. However, this is not easy, and there are huge positive as well as negative considerations to be kept in mind.
Here, it explores how to pay credit card bills using another credit card, risks associated with this practice, indirect means, and the best techniques for making intelligent credit card payments.
Understanding How Credit Card Payments Work
Before you can think in terms of using one credit card to pay for another, it would be good to understand how credit cards work. Credit card bills are usually paid off from savings accounts or debit cards or from UPI or even cheque drafts. Credit cards are primarily meant for lending cash, not for direct fund transfer from one card to another. Therefore, in the modern banking scenario, there is no possibility of paying a credit card with another credit card as the banks do not allow such transactions to occur.
The indirect ways of managing credit card debts by the use of another credit card have benefits, costs, and risks associated with them.
Since direct payments aren’t possible, understanding how to pay a credit card bill from another credit card through indirect methods becomes crucial.
How to Pay a Credit Card Bill from Another Credit Card: Best Indirect Methods
1. Balance Transfer
Perhaps the most common and effective method of paying one credit card off with the help of the balance on another is by performing a balance transfer. It simply involves moving the outstanding balance of one credit card to another, which ideally has a lower interest rate or, for example, an interest-free promotional period.
How It Works:
- One of the most reliable ways to pay a credit card bill from another credit card is through a balance transfer.
- A balance transfer allows one to move debt to another credit card. Most banks now offer promotion balance transfers where the actual interest is charged at 0% on the amount being transferred, but only for a definite period, say six months or a year.
- You can avoid paying high interest charges and can have a longer time to settle the loan balance by transferring the balance on a card with a lower or no-interest rate.
Risks and Costs:
- Once the promotional time is over, the interest rates of your new card may shoot through the roof, so it’s especially crucial to settle the balance before the expiration of the promotional time.
- Some balance transfers have fees, usually between 1% to 3% of the total transferred amount.
Example:
You carry ₹50,000 as a balance in a card that has an annual interest rate of 24%. You can transfer this balance to a card offering 0% for 12 months. So you can avoid paying interest on that for that period and greatly lighten your load.
2. Cash Advance
Another way to pay a credit card bill from another credit card is by taking a cash advance, although it’s not the most recommended method. A cash advance is taking cash from your credit card account and using it to pay for another credit card bill. This approach is usually pricey and should only be used under a couple of circumstances.
How It Works:
- You withdraw the money from your credit card with an ATM or through banking services, then use the cash to pay for the credit card.
- Cash advances tend to attract higher rates of interest and fees, sometimes starting at the very point when cash is advanced.
Risks and Costs:
- There is virtually no grace period on cash advances, so interest will start accumulating immediately.
- Cash advance fees, for example, can reach up to 2.5 to 3.5 percent of the amount withdrawn.
- It becomes very costly due to the high-interest rates, making it a risky way to pay credit card bill from another credit card.
Why Paying Credit Card Bills with Another Credit Card May Be Risky
Indirect methods, like balance transfers or cash advances, can be used to pay a credit card bill from another credit card, though with caution.. However, there are risks; consider the following:
1. Accumulating Debt
Paying off one credit card with the other may provide some relief in the short-term but, in fact, it does not reduce the total amount of debt. It means that you have shifted the balance from one card to another, which in extreme cases may viciously turn into a debt revolving cycle if not properly managed. Using this approach to pay a credit card bill from another credit card may lead to an endless debt loop if you’re not careful.
2. High Fees and Interest Rates
As discussed above, balance transfer fees are quite common, and cash advances usually come with high interest and a fee that is applied on the spot. In this case, if you fail to pay the transferred balance in time before the expiration date of the promotional period or the cash advance in time, the costs amount to massive amounts.
3. Impact on Credit Utilisation
You will pay a fee, and using a balance transfer or cash advance will impact your credit utilisation ratio-the percentage of your available credit you’re using. A high credit utilisation ratio can harm your credit score.
4. Credit Score Concerns
Both a balance transfer and a cash advance can have an effect on your credit score if you are not careful. For example, you will temporarily lower your credit score when applying for a new credit card to make a balance transfer due to the hard inquiry. And if you don’t immediately pay down the balance, then it is likely to act as a bad influence on the credit score as well.
How to Pay a Credit Card Bill Without Incurring Charges
If you intend to settle some of your credit card debt by utilising another, then there are smart ways to do this without piling up huge charges. Here are a few such tips as to how not to get into unnecessary fees:
1. Look for Balance Transfer Promotions
Many credit cards offer promotional periods to pay the credit card bill from another credit card via balance transfer with no interest for a specific number of months (e.g., 6-12 months). Grabbing offers such as these enable you to reduce or eliminate interest charges on your balance, giving you the much-needed oxygen to pay off your entire balance.
2. Choose Low-Interest Cards
If you ever need to withdraw cash from an ATM, then you might prefer a card that has low-interest rates for cash advances. This way, you save some money versus others if you do need to borrow every now and then.
3. Pay Off Balances Promptly
You will pay high interest on a cash advance if you don’t clear it out of your account immediately, at the earliest opportunity. The more prolonged the cash advance balance lingers in your account, the more expensive it gets.
Smart Ways to Pay Off Credit Card Debt
Instead of using something like one credit card to pay for another, use the following smart strategies to pay off your credit card debt without excessive interest charges:
1. Pay More Than the Minimum
This is the most important strategy for credit card debt payment. Only paying the minimum amount every month leads to long-term debt collection because it yields great interest. Always try to pay more than the minimum required at the time of payment.
2. Set Up Automatic Payments
This way, you will not miss any of your payments. You can automate at least the minimum payment to avoid late fees, but in addition, full payments are better if possible.
3. Use Payment Reminders
If automatic payments make you uncomfortable, you can still set reminders for when to pay before the due date. Most banking apps and online services have reminded people when to pay bills on time.
4. Focus on High-Interest Cards
If there are more than one credit card, the procedure to be followed initially is to pay off the cards that have the highest rate of interest. This process of clearing multiple cards in such a manner can be said to be the avalanche method wherein you can effectively reduce your interest costs.
5. Avoid Unnecessary Spending
Maintaining control over your credit card usage ensures that you do not spend more than required. Thus, keeping your balance under control. You could make a budget to regulate your expenditure and keep an eye out for impulse buys.
Still have questions? Watch this short video guide to understand how to pay a credit card bill from another credit card in simple steps: Watch on YouTube.
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Conclusion
Pay a credit card bill from another credit card is not straightforward and should be done with caution. Common sense dictates that one pays for another credit card with another credit card. That is not what happens. Balance transfers or cash advances create short-term debt management solutions but are expensive and fraught with risk. A better approach than trying to pay a credit card bill from another credit card is to simply pay more than the minimum every month.
