Paying One Credit Card Bill Using Another? Here’s How It Can Lead To Debt Trap

When you are juggling credit card bills, using one card to pay off another might seem like a quick fix. It's a strategy some consider during a financial crunch or to manage payment due dates more easily.

This approach might offer some breathing space or immediate financial relief. However, it often comes with hidden fees, higher interest rates, or potential harm to your credit score. This can also lead to a debt trap if you keep on relying on other credit cards to clear outstanding dues.  

In most cases, paying one credit card with another isn’t straightforward. You can’t usually pay a credit card bill directly using another card. However, there are ways around it, such as a balance transfer or using a credit card loan or cash advance. Each of these methods comes with its own pros and cons.

A balance transfer allows you to shift the outstanding balance from one credit card to another, usually to a card offering a lower interest rate or zero interest for the promotional period. This can be a smart move if done carefully. Many banks offer zero interest on balance transfers for a limited time. If you’re disciplined enough to repay the amount within that window, you can save significantly on interest.

However, balance transfers often come with a processing fee and failing to repay within the free period can lead to higher interest charges.

Some people consider withdrawing cash from one credit card and using that to pay off the bills of another card. This is risky. Cash advances come with high interest rates from day one, along with additional fees. There’s no interest-free period and this method can quickly lead to deeper debt.

When used responsibly, a balance transfer won’t negatively affect your credit score. In fact, reducing high-interest debt can improve your credit utilisation ratio over time. But if you’re frequently moving balances across cards without paying them off, it may signal financial stress to lenders.

Paying one credit card with another can be a short-term solution, but it shouldn’t become a habit. If you are using balance transfers to reduce interest and manage debt better, it could be helpful. But avoid cash advances or using multiple cards to clear payments. It's always advisable to read the fine print and evaluate fees, interest rates and other factors before using this facility to avoid a debt trap.