Whether you’re short on cash or hoping to take advantage of bonus points, it may seem at times to be advantageous to pay your credit card payment by using another credit card. That begs the question: Is this possible? And more importantly, is it really beneficial to your financial well-being?
To answer the first question, it’s usually not possible to simply pay your credit card payment by punching in another credit card number in the payment area. Most credit card companies will only accept payments from a checking, savings or money market account. In other words, they want cash (or if you are old school you can write a check).
However, there are ways to get around the system, although those techniques might cost you.
Using the cash withdrawal option from your credit card
Most credit cards have a cash withdrawal or cash advance option that allows customers to go to a cash machine and use their credit card to obtain a cash withdrawal. Unfortunately, this “convenience” often comes with a transaction fee and a hefty interest rate. It’s best to check the terms of your credit card agreement regarding cash withdrawals and advances before using this method to pay a credit card with another credit card.
Using convenience checks
Credit card companies often send convenience checks out to customers that allow them to either pay off or make a payment on another credit card, or to simply deposit the check into a checking or savings account at a bank.
Again, it’s important to look at the fine print before choosing this option. Determine the interest rate that will be charged for the convenience check amount and look to see if there are any fees associated with the use of the check. Don’t use a convenience check from your credit card account until you’re fully aware of the charges you’ll pay for doing so.
Opting for a balance transfer
Online balance transfers are becoming increasingly easy in today’s technologically advanced world. A few clicks of the mouse, and you’ve just paid your credit card with another credit card. But at what price?
Let’s assume you’re making a $300 payment on a credit card by using the balance transfer feature from another credit card. A reasonable balance transfer fee in today’s world is 5%, which means you’ll pay $15 just for the convenience of making the payment in this fashion. It’s also important to look at the interest rate you’ll pay on the balance transfer and the term for the interest rate.
If you have to use another credit card to pay your credit card, you may be better off using the balance transfer option to move the entire balance over to the other credit card, provided the math makes sense and you’ll be paying less interest in the long run. If you’re going to opt for using a balance transfer, just make sure to avoid common balance transfer mistakes.
Before you pay your credit card with another credit card…
Before you take any steps to pay a credit card with another credit card, however, it’s important to analyze your financial situation and work to determine what the reasons behind the need are. Here are some questions you can ask yourself to determine if other changes can be made to help avoid this type of situation in the future.
Am I spending more than I make unnecessarily?
Take a look at your spending for the last four weeks. Are there unnecessary expenditures that are making you short on cash?
Can you cut expenditures such as restaurant outings, cable TV, unnecessary clothing purchases or other non-necessities in order to have more cash to pay the bills?
A monthly budget and spend-tracking plan will help you to avoid spending more than you can afford to on non-necessities in the future so that you can be sure to have enough money to pay bills.
Do I have too many bills?
Sometimes people are short on cash each month not because they’re spending on non-necessities, but because their necessities outweigh their income. If you’re in that situation, here are some ideas for loosening the reins on your budget.
- Sell stuff. Is there a car or recreational vehicle payment that’s straining your budget? Consider selling the car and getting a reliable car that’s far less expensive. Sell recreational vehicles and consider repurchasing when money’s not so tight and your debt load is less. Search your home or garage for other items that aren’t needed or used and sell them via Craigslist, a Facebook group or a garage sale in order to bring in more cash to pay down debt or put into savings.
- Downsize your home. Is your mortgage or rent payment higher than 35% of your take home pay? If so, it might help to downsize your living quarters in order to free up some cash. Talk with a trusted mentor who’s good with money who can help you determine if it would be wise to downsize your home.
- Get a side hustle or second job. Sometimes when a money situation is tight, bringing in more income is the answer. Ask for more hours at work, get a second job at night and/or on weekends or look online for ways to bring more income into your life through side hustles. The more money you can bring into your home, the less stressful managing that money will be.
Although it’s sometimes necessary to pay a credit card with another credit card, it’s not the ideal choice and should be avoided if possible by using the steps above to cut expenses and bring more income into your home. Remember, cash is king. You’ll also avoid costly fees and interest charges by paying with cash from your bank account as opposed to paying with another credit card.
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