Can you use one credit card to pay off another Credit Card bill?

Summary: While using one credit card to pay off another is possible, this debt shuffling tactic comes with high fees, interest charges, and other disadvantages that make it an imprudent choice for most cardholders.

04 Dec 2023 by Team FinFIRST

Pay Credit Card Bill using another credit card

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From shopping to dining and online payments, credit cards are becoming an integral part of urban Indian life. In July 2023, India had about 8.99 crore active credit cards, and credit card transactions in the country continue to rise. The convenience of credit cards is that they come with a variety of repayment options. But can you pay your credit card bills with another credit card? Read on to find out.

Can I use one credit card to pay off another?

With multiple cards in the wallet, a common question is whether card dues can be managed by paying off one card bill using another credit card. This route may seem convenient and rewarding but it has some major pitfalls that make it unsuitable for most people.

While most card issuers allow payments to other bank cards, there are some limitations:

You cannot pay your card dues with a card from the same issuer. So, an IDFC FIRST Bank Credit Card card cannot be used to pay another IDFC FIRST Bank Credit Card billbills.
Transaction fees ranging from 2% to 4% are typically applicable on such payments. This makes it an expensive route.
Banks restrict such payments to 30% to 50% of the total card limit to curb debt swapping.

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Pros of paying card bills with another credit card

Some benefits of paying credit card bills via another card:

Convenience of managing card payments digitally and avoiding cash/cheques.
Accruing rewards like cashback or air miles on the payment.
Meeting temporary liquidity crunch or minimum payment due.
Optimising credit usage if one card has a surplus limit.
Getting short-term funds for emergency or unforeseen expenses.

Cons of paying card bills with another credit card

However, the disadvantages of this approach outweigh any benefits:

It leads to swapping debt across cards rather than paying it off. This cascades interest costs and leads to a debt trap.
The grace period benefit is lost, with interest accruing from the first day.
The fee levied can range from 2-4% of the payment amount which is expensive. This adds to overall interest costs.
This practice can signal can negatively impact your credit score by signalling to credit agencies that you are credit hungry.
Reduces overall usable limit across cards, affecting your purchasing power.
Any payment delays or defaults trigger penalties on both cards.

Why paying card bills with cards is discouraged

Due to the high costs and risks involved, experts discourage using one credit card to pay off other card dues frequently or regularly. It is an unhealthy way of revolving and accumulating debt rather than repaying it. The high interest costs, reduced credit limit, and impact on credit history are deterrents for most people.

Banks also monitor such transactions to identify and curb debt swapping. If used too frequently, they may restrict further payments or even cancel the card itself.

Recommended ways to pay credit card bills

Instead of swapping debt, adopting a disciplined approach to using and repaying cards is advisable.

Spend prudently within your repayment capacity and avoid binge swiping.
Pay bills in full within the due date to avail of the grace period and avoid finance charges.
Have automatic payments from your bank account towards the minimum due amount.
Opt for a balance transfer facility to move dues to a lower interest card.
Consider lowering the credit limit if the existing limit promotes overspending.
Utilise SMS alerts to track card usage patterns and payment deadlines.
Seek a short-term personal loan to pay off card dues in case of a cash crunch.

Conclusion

Having multiple credit cards has become commonplace. Hence, using one card to pay off another card’s bill can seem convenient. However, the costs and drawbacks associated with this option make it an unhealthy habit for managing your finances and credit score.

Avoid using this route regularly to repay your debt. Instead, spend within your repayment capacity, pay bills in full each month, and use short-term loans or balance transfers to tackle temporary cash shortages. Credit cards combined with disciplined repayments are the key to enjoying their benefits responsibly.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.

The features, benefits and offers mentioned in the article are applicable as on the day of publication of this blog and is subject to change without notice. The contents herein are also subject to other product specific terms and conditions and any third party terms and conditions, as applicable. Please refer our website www.idfcfirst.bank.in for latest updates.