Credit cards are different from debit cards although they are both issued by the bank. A credit card can be seen as a form of a loan with a spending limit. While getting a credit card from a bank, there is usually an agreement on how long you have to pay back the loan – generally between 25 – 30 days’ grace period. You will be charge interest on the money if you don’t pay back within the grace period. So, what happens when you can’t pay for your credit card? Can you pay a credit card with a credit card? You will find out as you read on.
Consequences of not Paying your Credit Card
The most significant impact of not paying your credit card is a negative or low credit score – you know what that means. A poor credit score is a big financial blow. It can prevent you from getting a further line of credit. Another consequence of late or non-payment of credit card is paying more interest on the credit. You can also be charged late payment fee later, which can amount up to $27.
You keep owing the bank for every monthly payment that you miss, and the result is that your debt keeps increasing. At this point, there will be so much pressure on you because you will be looking for every means possible to pay this debt to prevent facing further severe penalties like legal actions. If your credit card issuer takes legal action against you, they report to the credit bureau. At this stage, there is the risk of having a bad credit score.
Naturally, you will think to yourself, if you can pay a credit card with another credit card. That is probably why you are reading this post. The answer is no, but technically there is a way around it. So, there are 5 tricks to doing this.
5 Tricks that Help you Pay a Credit Card with Another Credit Card
If you need help in easing your debt pressure, then these 5 tips will be useful to you.
1. Pay your Debt with Cash Advance at the ATM
You can make use of the ATM where you can take a cash advance from the ATM and then deposit the money into your checking account to pay for your debt.
The flip side of this method is the price at which you are doing it. Cash advances can be costly. You will get charged up to 5% on your withdrawal – it doesn’t matter how much you withdraw. In addition, the interest starts counting immediately at a rate of around 25%.
2. Convenience Check
This trick is simple. There is a convenience check that all card issuers send to their customers, you can cash out on this check. You are not encouraged to use this method because of the high charges involved.
These two options are not good for you.
Part of the reasons are apparent in the explanation above. So let’s consider this example:
If you withdraw $4000 to settle a $4000 credit card debt, you will be charged $200 which you must pay. The interpretation of this is plan; you have moved from a $4000 debt to a $4200 debt. This is not a good move in any way except that you have a new credit card debt to settle.
A Better Alternative to Consider
3. Transfer of Balance
This is a rather better option compared when compared to convenience check. Use balance transfer to pay your credit card debt.
This method is straight forward. Just as the name implies, you can transfer your balance – some or all, from one credit card to another. Transfer of balance can be very enticing when the new credit card has an interest rate that is lower than the current credit card. Most of the credit transfer card offers a 0% interest on balances that are transferred – for a specific period of time. This method has proven to be an effective means of voiding to pay interest on a credit card that you owe debt on.
One significant added benefit of transfer of balance is that it helps you speed up paying off your debt.
4. Use of e-wallet
You can transfer money from a new credit card to e-wallet and then send to the current credit card to pay your debt. This method is not free as you will pay a service fee.
5. Minimize your Credit
You can pay off your credit card debt quickly with another credit card if you have not amassed so many credits on it. So when you are in a tight spot and can’t possibly pay off your debt, you will easily switch to a new credit card, make use of one of the above options without having so much extra debt to settle.