Does it hurt your credit score to pay a credit card with another credit card?

Can Paying a Credit Card with Another Card Hurt Your Credit Score? The Indirect Impact

The idea of using one credit card to pay off another might seem like a convenient way to manage finances, perhaps juggling due dates or consolidating debt. However, the reality is that directly paying a credit card bill with another credit card is almost universally impossible. Credit card companies simply dont allow this type of transaction through standard payment channels.

Think about it: the inherent business risk is considerable. Allowing it would create a potential infinite loop of debt, where individuals could continuously use credit to pay credit, effectively never settling their obligations. Its just not a sustainable model for credit card issuers.

So, if direct payment isnt an option, how does this question relate to your credit score? The answer lies in indirect methods, primarily through balance transfers.

A balance transfer involves moving the outstanding balance from one credit card (the old card) to another (the new card), often to take advantage of a lower interest rate or promotional offer. While this can be a beneficial strategy for debt management, its crucial to understand the potential impacts on your credit score.

Heres a breakdown of how a balance transfer can affect your credit:

1. Credit Inquiry: Applying for a new credit card for the purpose of a balance transfer necessitates a credit inquiry. This hard pull on your credit report occurs when a lender checks your credit history to assess your creditworthiness. A single hard inquiry usually results in a small, temporary dip in your credit score. The impact is generally minimal and fades relatively quickly, but its still something to be aware of.

2. Credit Utilization Ratio: This is a key factor in your credit score. It represents the amount of credit youre using compared to your total available credit. Ideally, you should aim to keep your credit utilization below 30% on each card and overall.

• Impact on the Old Card: After a balance transfer, the utilization on your old card should decrease significantly, possibly even to zero. This is a positive impact on your credit score. Lower utilization demonstrates responsible credit management.
• Impact on the New Card: The balance transfer will increase the utilization on your new card. If the transferred balance pushes the utilization ratio on this card above 30%, it can negatively affect your credit score. This is because high utilization can signal to lenders that you are overextended and may be a higher credit risk.

3. Account Age: The age of your credit accounts contributes to your credit history. Closing older accounts, even those youve transferred the balance from, can potentially shorten your average account age and slightly impact your score. However, the impact of closing an account after a balance transfer is generally less significant than the impact of credit utilization.

4. Promotional Interest Rates: Balance transfers often come with introductory 0% APR periods. If you take advantage of this, its crucial to pay off the transferred balance before the promotional period ends. If you dont, the interest rate will jump to the standard APR, and the debt could become more difficult to manage. While this doesnt directly impact your credit score, it can lead to missed payments and increased debt, which will negatively impact your credit.

In conclusion: While you cant directly pay a credit card with another credit card, utilizing balance transfers as a workaround can have both positive and negative impacts on your credit score. A balance transfer can be a useful tool for managing debt and potentially saving money on interest, but its essential to carefully consider the implications for your credit utilization, credit history, and overall financial health. Manage your credit wisely, keeping utilization low and making timely payments, to maintain a healthy credit score.