You can still pay off your credit card with another credit card if you don’t have enough money in your checking or savings account. To pay it off, you can either do a balance transfer or take a cash advance and deposit it into a checking account. Both options have their own set of risks, so make sure the method you choose is appropriate for you—and your budget!
Method 1 Using an Existing Credit Card
1. Examine your credit score to see if using an existing card is advantageous. Before you decide to do a balance transfer or take a cash advance with an existing credit card, consider your credit score. Both processes can have an impact on your card utilisation rate and your credit score.
Your credit score reflects your likelihood of repaying debt. If you intend to borrow money for large purchases, you must have a good credit score (like a house or car).
Equifax, Experian, and TransUnion all have websites where you can check your credit score.
A cash advance will not directly affect your credit score, but the high interest rate on a cash advance may make it difficult to make monthly payments on time, lowering your score.
2. Check to see if your current card allows balance transfers. If you have another credit card in addition to the one you’re trying to pay off, read the fine print to see if balance transfers are permitted. If you’re unsure, call a customer service representative at the number on the back of your card.
Check the interest rate on your current card—the lower the rate, the better.
Check for balance transfer fees if your issuer allows them.
If transferring your balance to an existing card is feasible and advantageous, contact a customer service representative by phone or online to submit a balance transfer request.
Balance transfers are not permitted on all credit cards, so this may not be an option for you.
3. Request convenience checks from your bank in order to obtain a cash advance. Some banks already send out convenience checks; if not, request that they do so. Then, use the check to write out the amount needed to cover your balance and deposit it into your checking account, allowing you to pay off your other credit card.
Make sure your credit limit is greater than the amount of the balance you want to pay off.
If you’re struggling to keep up with bills and other monthly payments, using a convenience check to get a cash advance isn’t a good idea because you’ll be paying 2 percent to 8 percent interest on the amount from the day you take it to the day you pay it back.
Method 2 Transferring the Balance to a New Card
1. Look for a credit card that offers a 0% introductory rate. Look for banks and credit unions that offer 0% interest for the first six months you have the card. Make a note of when the 0% rate expires so you don’t have to pay the regular rate.
Check to see if you can pay off the majority (if not all) of the balance during the introductory period.
Examine credit cards that offer 12 or more months of interest-free use.
2. Select a credit card that allows balance transfers. Check the terms and conditions of your potential new card to see if the issuer allows balance transfers and, if so, if the credit limit is high enough to cover your balance. Check to see if there are any limitations on transferring a balance between different types of cards.
For example, you may be unable to transfer a balance from one Citi card to another.
Check that the card’s maximum credit limit is greater than the balance you want to transfer.
3. Apply for a balance transfer card and wait for approval. After you’ve found the right card for you, go to the bank or issuer’s website and apply for a credit line. If you have good credit, you will most likely be approved. The following factors will be considered by issuers:
The proportion of payments made on time.
How much of your available credit do you actually use? (e.g., if you only use 30 percent of your total available credit each month).
How old are your credit accounts?
What number of accounts do you have?
Any negative marks (for example, if you have ever failed to repay a loan in accordance with the terms of the agreement).
How many difficult inquiries do you have? (i.e., the number of times a creditor has checked your credit for approving a loan or credit card).
What number of 30-day delinquencies you may have, if any.
4. After you’ve been approved, submit a balance transfer request to the new issuer. Call a customer service representative or submit your request online. Give them the account number of your old account (the one you’re closing) and the amount you’d like to transfer.
Keep in mind that the issuer may take 7 to 10 days to process the transfer, so be patient and continue to make payments on your old credit card to avoid incurring late payment fees.
5. You must pay the balance transfer fee. Once your balance transfer is completed, the issuer will charge you a fee ranging from 3% to 5% of the total balance. Make sure to factor transfer fees into your budget.
Balance fees can be expensive. For example, if you’re transferring $10,000, you’ll need to pay $300 to $500.
Some issuers, however, will not charge a transfer fee if you request one within 60 days of opening an account.
Before you sign up for a new account, make sure to review the membership requirements to avoid any surprises!
6. Once your balance transfer is approved, pay off your debt. Pay off the new card on time to avoid incurring additional debt and incurring additional fees. Some lenders will revoke the 0% interest rate if you miss even one payment.
It is important to note that if you were unable to transfer your entire balance, you will still be required to make minimum payments on the old credit card account.
Maintain your budget so that you can pay off as much of your balance as possible during the introductory 0% APR period.
Method 3 Getting a Cash Advance
1. Open a cash-advance-capable credit card account. Look for credit cards with low interest rates and no cash advance fees. It’s also important to consider any reward points you might earn after spending a certain amount, as well as whether the account has any annual fees.
Credit unions are more customer-friendly than banks when it comes to fees.
Look online for credit cards that have no cash advance fees, no annual fees, and a low APR.
2. Determine the fees and interest rates you will pay for a cash advance. Examine the small print in your credit card agreement. It will state whether cash advances are permitted and, if so, how to obtain one. It will also highlight some additional considerations you should bear in mind:
If you must pay a fee to obtain the advance.
The annual percentage rate at which you must pay for the advance.
How interest on cash advance balances accumulates. In most cases, interest on cash advances begins accruing immediately, so make sure you can repay the advance as soon as possible.
3. To obtain the cash advance, go to your bank or a full-service ATM. To obtain a cash advance, go to a bank teller or a secure ATM. Bring your card and a photo ID with you when you go to the bank.
You’ll need a PIN number if you go to an ATM. Call the customer service number on the back of your credit card if you don’t have one for your credit line.
Using an ATM is not ideal because you will be charged a transaction fee.
It’s worth noting that most lenders limit the amount you can borrow with a cash advance. For example, if your credit limit is $5,000, you may only be able to obtain a $1,000 to $2,000 advance.
If your bank offered it when you opened your account, you can also take out an advance using cash convenience checks.
4. If a cash advance is required, pay the fee. Most issuers will charge you a fee for obtaining a cash advance, which is frequently calculated as a percentage of your advance. This means that the more you get, the more you have to pay in fees. Typically, the rate ranges between 2% and 8%.
For example, if you request a $1,000 cash advance and the fee is 4%, you will be charged $40.
Don’t be afraid to ask your credit card company how they calculate your cash advance fee; if you ask, they have to tell you.
5. Pay off your debts by depositing the funds into your checking account. Take the funds to your bank and deposit them into your checking account. Then, use that checking account to pay down your credit card debt.
Make a concerted effort to repay your cash advance as soon as possible to avoid incurring interest charges.
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