How do you pay a credit card with another credit card? Use a balance transfer check.

Issuing banks do not accept credit card payments the way that merchants do. The interchange fees make this cost prohibitive.

However, banks often promote convenience checks to qualifying customers and prospects. Use the low-interest promotional period to save money – while paying one credit card with funding from another.

Learn how to do a balance transfer: how they work, how they compare to debt consolidation loans, how to avoid hurting your FICO and Vantage score.

How to Do a Balance Transfer

How do you do a credit card balance transfer to pay off another credit card? The process is simple. Write a check for the full amount owed (or less) using money borrowed from another company under better terms. However, determining whether this tactic is worthwhile is more complicated.

Learn how balances transfers work and then compare the pros and cons to the alternative – taking out a personal loan to consolidate obligations. Choose the option that fits your goals.

How Balance Transfers Work

How does a credit card balance transfer work when paying off another credit card? One bank sends you checks you can use for payments at another bank. You incur an upfront fee and may enjoy a lower promotional interest rate that lasts for a defined period.

Learn the inner-workings before taking advantage.

New or Existing

Making a balance transfer from an existing credit card is the preferred option. This alternative works when you have sufficient available credit. The bank may send you checks in the mail and/or attach them to your monthly billing statement.

Each bank uses different names (Convenience Checks, SUPERCHECKS) and defines the terms and conditions in unique ways. Read the legal language carefully. The offers often suggest multiple ways to use the money.

Fund home improvements Consolidate debt
Pay off higher interest credit cards Cover car repairs
Pay individuals Other expenses

Opening a new account to increase your available credit limit is the fallback option. Doing so may hurt your FICO or Vantage score (see below).

Count as Payment

Balance transfers count as payments for the other credit card provided the funding arrives before the due date. Transfer times vary and could cause delays. Continue making at least the minimum payment until you see the transfer amount credited to your other card accounts.

Avoid late fees and other consequences until you see a zero amount outstanding.

Count for Rewards

Balance transfer checks do not count as purchases that earn rewards (miles, points, rebates, or cash back) or help you meet minimum spending requirements. You will need to find another way to meet the minimum spend associated with rewards card signup bonuses.

Same Bank

You cannot use a balance transfer check to pay off a credit card from the same bank or one of its affiliates. The same bank will reject the payment and may charge a returned payment fee.

However, feel free to use these checks with different issuing banks.

Available Limit

You can write a balance transfer check in any amount up to the available credit limit on your account. The available limit (open to buy) is the difference between the account limit and the current amount owed. Leave yourself some cushion if you intend to continue making purchases.

Payment Options

Read the balance transfer terms and conditions carefully before using the money to pay off other credit cards. You have three payment options that may have different terms (transfer fees, interest rates, and promotional periods).

  1. Send the check directly to the other issuing bank(s)
  2. Direct deposit the money in your checking account before paying other cards
  3. Obtain a cash advance via ATM (not recommended)

Transfer Fee

The bank charges a balance transfer fee (3% to 5% range) upfront for all qualified transactions. Keep in mind that late fees are subject to interest, which compounds daily. However, the charges will be minimal during the promotional period (sometimes 0%).

Remember that interest rates jump higher (non-promotional) when this period ends.

Interest Rates

Three balance transfer interest rate definitions determine if this approach actually helps you to pay down debt on other cards. The banks apply the applicable rate immediately after each transaction.

  • Promotional APR is a discounted annual percentage rate (sometimes 0%) that applies to qualified transactions during a specified period
  • Non-promotional APR is the higher annual percentage rate charged on two types of transactions
    • Purchases made during the promotional period if you pay less than the full amount owed
    • Remaining amounts owed after the promotional period expires

Therefore, transferring a balance is a good idea for people who make few purchases on the card and can retire the full amount owed before the promotional period ends. Those who revolve often fall into deeper trouble.

VS Consolidation Loan

Compare a balance transfer versus a debt consolidation loan before borrowing money to pay off another credit card. Each approach works differently and has unique pros and cons.

Balance Transfer Debt Consolidation
Upfront Fee Yes Yes
Promotional Rate Yes No*
Interest on Purchases Yes No **
Payment Terms Revolving Installment***

Debt consolidation loans can help you eliminate all of your revolving obligations by converting it installment debt and paying an upfront fee.

  1. * Fixed interest rates without promotional teasers over the contract term
  2. ** You incur no interest on new credit card purchases if you pay in full each month
  3. *** Installment contracts have fixed monthly payments that force you to retire the original principal within a defined period (3 to 5 years)

In contrast, when transferring a balance you are moving money between two revolving accounts for an upfront fee in order to gain a temporary benefit.

  1. * Promotional interest rates can save money in the beginning
  2. ** You pay interest on purchases until you retire the entire amount owed
  3. *** Revolving contracts have flexible monthly payments that allow you to carry costly debt indefinitely

How Balance Transfers Affect Credit Scores

How do balance transfers affect credit scores such as FICO or Vantage? This is an important question for home loan applicants and others making large purchases. Paying one credit card with another credit card is just shifting money around and has no impact on your ratings.

However, you can hurt your ratings if you open or close an account in the process.

Closing Cards

Doing a balance transfer without closing the other card is better for your FICO or Vantage score. Closing a credit card raises your revolving utilization ratio – which is bad. The equations calculate this ratio by dividing the total amount owed (numerator) by total credit limits (denominator). Closing an account lowers the denominator and raises (hurts) the ratio.

Instead of closing the old account, keep it open and active by making one small recurring charge every month (Netflix, cellphone, car insurance, subscriptions, tithing, charitable giving, etc.). Set up automatic online payments for the one repetitive amount.

Hard Inquiry

Doing a balance transfer does not result in a hard inquiry (which hurts your FICO or Vantage score) when you move money between two existing accounts. Banks routinely perform account review programs on existing cardholders and send promotional checks to those meeting qualifications. These account review programs result in soft inquiries, which do not affect scores.

Transferring a balance does hurt credit scores when you open a new account. The issuing bank will pull a copy of your consumer report and the furnishing bureau will log the hard inquiry. Shortly after, the new account will appear on the reports of all three bureaus and push your score down further. New account activity makes up 10% of the equation result.

Therefore, transferring a balance before a mortgage application or closing should not be a problem – if you use the convenience checks attached to the billing statement of an existing card. The opposite is true if you apply for and open a new account.