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Can I Use One Credit Card to Pay Off Another?

Credit cards are really resourceful when it comes to managing finances but they also carry high interest rates on unpaid balances. So, if you default on repayments, you might end up paying a lot of unnecessary charges in the form of interest or late payment fees.  But, you could often miss out foreseeing a financial crunch. You might be out of funds while your due date for repayment might be approaching closer. There might be a situation where you fail to even repay the minimum amount payable every month. However, you wouldn’t ideally want to miss out on these repayments as this will only turn out to be a more expensive affair.

This is the moment when you would want to resort to arranging funds for repayment from a different source. Have you ever consider using another credit card to pay off bills on the one you’re using right now?

Well, you might not have, as most people avoid using credit cards to make repayments for another credit card bill. There might always be a better alternative. One important consideration as to why this might not be a popular choice is the very fact that credit cards usually come with high rates of interest. However, if you’re completely running short of options, you could employ it as a last resort.

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How to Pay Off Credit Card Bills Using Another Credit Card

Many banks don’t allow you to pay credit card bills through another credit card directly. However, there is something you could do instead. Most credit cards in Singapore provide a cash advance facility. You can use your credit card that provides the cash advance facility to get funds and deposit them into a chequing account. These funds can be subsequently used directly from the chequing account to pay off credit card bills on another credit card. Besides cash advances, you can also pay your credit card bills through convenience cheques. These cheques are usually provided by the credit card issuers or you can obtain them from your banks. They can be used to deposit funds into your chequing account. Similar to paying through cash advances, you can use the deposited funds to pay off your credit card bills.

Both the approaches of paying credit card bills are useful and will help you avoid any situation of falling under a credit card debt pile, especially at times when you face a cash crunch and there is no other way to pay off the bills save for using another credit card. However, what you really need to know is that employing either of these approaches can turn out to be quite an expensive affair. When you take a cash advance from an ATM or through convenience cheques, it usually involves an interest rate considerably higher than one you would be charged on retail transactions.

Additionally, you may also have to pay a cash advance fee which is applicable for most banks in Singapore. This fee usually stands at 2% to 5% of the cash advance amount. You can avoid paying these unnecessary charges by not using a credit card to settle bills on your other credit cards, unless you have no other alternative to paying off the bills.

What Are the Other Modes of Paying Credit Card Bills?

Paying your credit card bills through another credit card can turn out to be a really expensive affair and is not something you would ideally want. In situations where you run out of funds, you can look for alternative options of making payments such as balance transfer plans or debt consolidation plans.

Use Balance Transfer to Clear Off Your Credit Card Bills

Credit card bills might pile up over time and you might find it difficult to clear the debts due to the shortage of funds. You might also end up being in a situation where you’re completely out of funds to clear credit card bills for a particular month.

It can be difficult at times to clear credit card debts due to the heavy interest being charged on the unpaid amounts. You can opt for a balance transfer plan in such situations. It is basically a short-term loan offered on a credit card or credit line account. The bank usually opens a new credit card or credit line account when you opt for a balance transfer plan. The balance transfer plans are usually available in tenures of 3-12 months. Most of the banks in Singapore offer balance transfer plans with 0% interest rates. The 0% interest rate on balance transfer plans is usually provided for at least a year, which is a significant amount of time for clearing your credit card bills without having to pay any unnecessary charges.

Using this plan, you can transfer all your outstanding credit card bill amount to a 0% interest rate loan. With the balance transfer option, you don’t have to pay the usually high rate of interest charged on your credit card or credit line debts.

However, using a balance transfer plan has its own disadvantages too. You will have to pay certain finance charges when you opt for a balance transfer. For instance, most banks charge you a balance transfer fee when you opt for it. This fee usually stands at 3% to 5% of the balance transfer sum. Besides, you must choose a balance transfer plan only when you’re pretty sure about making payments on time.

In case you miss making one single payment on time, the 0% interest rate offer could be terminated and you might end up paying interest charges on your plan. In this case, the objective of paying credit card bills through a balance transfer plan will be rendered useless, in terms of saving money, particularly when you’re short on funds. The 0% interest rate charged is what makes balance transfer viable, especially in cases where you might run out of funds. You can not only pay off your credit card bills on time, but you can also avoid interest charges for the longest time.

Clear off Your Credit Card Bills Through a Debt Consolidation Plan

You could end up being in a financial crisis for the longest period and your credit card bills might just keep piling up over time. Besides, you might be owning several credit cards on which the payments are due. One way to get out of such debts or pay your credit card bills is to opt for a debt consolidation plan instead of using another credit card for the same. It lets you consolidate all your bills and debts across different financial institutions at a comparatively lesser rate of interest.

However, you can only apply for this plan if you have a significant amount of unsecured debts exceeding 12 times your monthly remuneration.

A debt consolidation plan is usually characterised by fixed monthly repayments until the time you fully pay off all your debts. When you apply for this plan, all your current unsecured credit facilities generally become non-operational. Moreover, you will not be allowed to get any new credit facilities. This might be subject to change in the case of education, medical, or business loans. However, you might be allowed to have one credit card with a nominal credit limit so that you can manage your monthly expenses.

So is This a Feasible Option?

You could use a credit card to make bill repayments for another card through cash advancement or cheques, however, this must be your last resort even if you’re out of funds. Keep in mind that using one card to pay another credit card bill can be quite an expensive affair, one you would ideally want to avoid. However, there might be a situation where you are unable to use any other alternative to obtaining funds for bill payment. A credit card could help you make repayments in this scenario.

As mentioned earlier, you must ideally opt for a balance transfer plan or a debt consolidation plan as these modes of repayment not only help you clear credit card bills or large debts, but these are also slightly cheaper modes of payment. However, when you opt for a balance transfer plan, you must ensure paying off the credit card bill or the debt amount within the interest-free period. If you fail to clear the bill within this timeframe, you will be charged with a higher interest rate after the period of 0% interest rate.

Besides, in the case of a balance transfer plan, you must also ensure your ability to make the minimum payment. If you fail in doing so, you will have to pay an unneeded late payment charge.

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