Money Talks: Using one credit card to pay off another – is it wise? Your options explained


New Delhi: How many times have you considered applying for a new credit card to pay off yours? If you haven’t done so yet, so much the better, hopefully you won’t be able to take this desperate step.Also Read – RBI Enables Linking Credit Cards to UPI Payments. What this means

Technically, it’s not possible to transfer money directly from a credit card, but you can do it indirectly. What are these means? Let’s explore the means and the consequences. Also read – Apple device users, BEWARE! The company does not accept debit and credit cards for payments in India. here’s why

By balance transfer

You can pay your credit card bill using another by balance transfer. This means you can transfer your balance from credit card A to credit card B where credit card B should be a card with a lower interest rate, preferably a card that has an introductory offer of zero percent APR (annual percentage rate). This interest-free period ensures that the monthly payments you make during the promotional period are fully applied to the principal balance. Also Read – RBI Partially Lifts Tech Ban on HDFC Bank and Allows it to Issue New Credit Cards

Advantages and disadvantages

Balance transfers could be a great option for someone who wants to switch their credit card to one that offers a lower interest rate and other incentives. Card issuers generally offer interest-free payments for the first few months and then interest will be charged depending on the repayment term you choose. If you are able to find the right deal, debt transfer would save you a lot of money in the long run.

Most credit cards charge a fee for transferring the balance from another credit card. You should do your research and find out if the fee is worth switching to another credit card.

If the transferred debt is not paid in full before the end of the interest-free period, the outstanding amount will be subject to the card’s regular APR and this could be higher than that of the card you are transferring from. .

If you miss a payment, you will be charged interest on the remaining debt even if the interest-free period has not ended.

You could also be denied in the process if you have a bad credit history and a low credit score.

Withdraw money with your credit card

Suppose you have two credit cards, A and B, and you need to pay your existing bill with credit card A. All you have to do is withdraw money using your credit card B at ATM of the respective bank, deposit to your debit account and then pay credit card A using this money. This is an easy way to pay an overdue credit card bill.

Advantages and disadvantages

The cash advance is a quick option and will technically give you the option to pay off another credit card, which may have an even higher interest rate. In such a scenario, you may not have time to complete a balance transfer or your balance transfer request may be rejected. The cash advance is a reliable option in this sense.

However, you will incur significant fees, including credit card cash advance fees, when withdrawing cash from a credit card. Typically, banks charge 2.5-3% of the amount withdrawn as a credit card cash advance fee.

You may not always get the money you need because the bank or credit card company may have set a limit on how much money can be withdrawn. Also, the feature may not be available on all credit cards.

Add money to an e-wallet

Consider credit cards A and B and the previous situation where you had to pay card A’s bill using card B. Transfer money from card B to an electronic wallet, Paytm wallet for example, then transfer the money from the wallet to your bank account or pay the card A bill using the wallet itself if the option is available.

Advantages and disadvantages

Adding money to an e-wallet and then transferring it to the bank account is more or less a digital form of the previous method where you would withdraw cash from an ATM. This is the main advantage, you don’t have to worry about going to an ATM, withdrawing money from your credit card and then depositing it into your bank account.

However, there are fees for the transfer of money which generally vary between 2.5 and 3%. Sometimes you may even be refused to transfer money if your credit card limit has been exceeded.

Although there are a few options, paying your credit card bills on time is the only way to avoid late fees and interest. In an adverse scenario, these options can help you control your expenses.


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