There are considerations to keep in mind. What To Consider Before Paying Off a Card With a Balance TransferĪ balance transfer offer is not a one-size-fits-all solution to paying off a credit card. Otherwise, the application process is the same as applying for any other new card. You’ll need to have the account number available of where you want to transfer debt from. Once you’ve picked a card, you can often request the balance transfer during the online application process. Be sure to calculate the cost of any balance transfer fees when deciding which balance transfer card is right for you. When comparing different offers, pay attention to the terms surrounding a transfer. Make sure any card you’re considering offers enough time for you to make a serious dent in your debt, if not wipe it out completely. When you’re seeking to shift your existing debt to a card with a lower rate, you’ll have to decide if you want a card with a limited-time promotional 0% APR offer, or if it makes sense to choose a card with a low ongoing interest rate. First, review your existing debt and determine how much interest you’re paying on any balances. There are a few steps involved in making a balance transfer. While a single new credit card application likely won’t lower a score significantly, applying for multiple new credit lines can. Credit scoring formulas consider recent applications for new credit.
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If the transferred debt is not paid in full before the intro 0% offer expires, the remaining debt will be subject to the card’s regular APR which could be even higher than the card you’re transferring from. The fee is expressed as a percentage of the amount transferred and can range from as little as 0% to 5% or more. Most credit cards will charge a fee for transferring a balance to their card. Assuming you don’t incur any more debt, your utilization rate will go down as you continue to make payments. With a balance transfer, your total credit increases by the amount of credit on the new balance transfer card. Merging the balances onto a single balance transfer credit card will consolidate your existing debt and remove the inconvenience of making multiple monthly payments. This no-interest period means that your monthly payments during the promo period will go entirely toward the principal balance. The primary benefit of a 0% balance transfer credit card is the 0% introductory APR offer. Let’s take a look at some of the pros and cons of balance transfers. N/A What Are the Pros and Cons of Balance Transfers?Īlthough it can be used as a way to help pay down debt, a balance transfer may not be the right move for everyone. But there are some nuances to the process. If you transfer that balance to a card with an introductory 12-month 0% APR offer instead, you won’t be charged any interest for that year. If you wanted to pay that balance off in a year, you’d have to pay about $916.80 per month, and the total interest charged would be approximately $1,001.60. Say you have a $10,000 balance on a card that carries an 18% APR. When you transfer a balance from a card that’s being charged interest to one that has no interest for a promotional period of time, you can save money. This is a balance transfer, and it’s the only time you can use one credit card to pay off another. The only scenario where it makes good financial sense to pay off a credit card bill this way is if you’re shifting a credit card balance to one with a lower interest rate, especially to a card that has an introductory 0% APR offer. This could cause your debt load to become unmanageable and affect your credit and overall financial standing. But even if they did, it would be a dangerous move to try and erase debt in one place by creating it in another. Why You Should Not Pay a Credit Card With a Credit CardĪs previously stated, other than a balance transfer, banks simply won’t allow you to pay your credit card bill by charging it to another card. Read on to learn more about this exception to the you-can’t-use-a-card-to-pay-off-a-card rule. There is one loophole: A balance transfer credit card. Typically payments via check, electronic bank transfer or money order are the only acceptable methods of payment. Banks don’t allow you to pay your credit card balance directly using another credit card. Paying off one credit balance using another card isn’t generally possible.
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