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Why Can’t I Pay Off My Credit Card With a Credit Card?

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These days you can use a credit card to buy just about everything. In fact, convenience is a big selling point when it comes to paying with plastic. But there are some things you generally can’t charge. Lottery tickets. Gambling chips. College tuition (at least not without forking over a fee).

And, yes, more often than not, you can’t use a credit card to simply pay off another credit card. One commenter appears to have encountered this issue.

“Tell me why I could not [pay] my clothing store credit card with other credit cards, and yes both [are in] my name and I do [pay] my bills,” they wrote.

The Reason Behind the Restriction

Issuers will rarely take a credit card as payment, said Eric Lindeen, vice president of marketing for ID Analytics in San Diego, California, which offers fraud prevention tools and credit risk management scores to credit card companies. The restriction is usually tied to interchange, or swipe, fees.

“Payment types are limited due to the cost of processing,” Lindeen wrote in an email. “A checking account transfer costs pennies compared to $20 for a $1,000 payment on a card.”

Issuers also want to prohibit anyone from gaming or “double-dipping” on their rewards program. Think about it: Were you able to pay one credit card directly with another, you could charge a big purchase to one rewards card, then rack up points, miles or cash back when you pay with another rewards card, which would rack up more points, miles or cash back once paid off as well.

“The rule of thumb is you can only collect the benefit once,” Lindeen said.

Still a Way to Pay 

There are some options, however, that will let you indirectly pay for plastic with plastic. You can technically take out a cash advance on one credit card, then use those funds to pay another — though this could seriously cost you. Cash advances typically come with a convenience fee and, if you can’t pay off the balance quickly, also come with a higher interest rate. And while balance-transfer credit cards let you move high-interest debt from one credit card to another that features a low-to-no introductory annual percentage rate, you’ll pay for that, too, via a balance-transfer fee. (This option, incidentally, may appeal to our commenter, who could be looking to pay off those purchases with a different credit card to minimize interest, given that store cards are known to carry high APRs.)

Both cash advances and balance transfers “can be valuable tools but can be dangerous if not used carefully,” Lindeen said. “Additional fees and upfront charges add up quickly. Also, terms for balance transfers vary dramatically between companies, cards, and even offers presented for the same card.”

Dealing With Debt

Of course, at the end of the day, paying a credit card with another credit card means exchanging one debt for another. So, if you find yourself needing to pay this way, you may want to come up with a debt management plan. High credit card balances can cost you in interest. (You can calculate the lifetime cost of your current debt here.) They can also hurt your credit score. (You can see how your debt levels are affecting your credit by pulling your credit reports for free each year at AnnualCreditReport.com and viewing two of your scores for free, updated each month, on Credit.com.)

To start paying down high debts, you can make a written list of what you owe, look into securing a lower interest rate (via refinancing, balance transfers or consolidation loans, for instance) and choose specific debt targets. For credit cards, you can prioritize payments by the card carrying the lowest balance or highest interest rate. This credit card payoff calculator can show you how long it will take to pay off your current balances.

Image: andresr

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