Personal Finance & Money Asked by TheChetan on April 3, 2021
Let’s assume that I have two credit cards and get a massive bill for the first one. When I need to pay it, I just use the second card. When the bill for the second one comes, I use the first. I can carry this on indefinitely, until one of the cards fails for some reason.
Is there any way for banks or other financial institutions can prevent this? On the contrary, since I’m spending more, are they incentivised not to do anything?
AFAIK, you can't simply pay one card with another card. You would have to take out a cash advance from card #2, put the money in your bank account, and use it to pay card #1.
The catch is that cash advances are charged interest (at a high rate!) from the time you take them, instead of having the usual 30-45 day grace period of ordinary charges. So the $1000 you charged to pay card #1 today means you need $1100 to pay card #2 next month, and the month after than you will need $1210 to pay card #1 again... Eventually, you will exceed your credit limit on one of the cards, and your whole house of cards comes tumbling down.
Correct answer by jamesqf on April 3, 2021
Typically, this is not allowed.
You can instead do one-off balance transfers or get cash advances (but these may cost large fees).
Answered by user14258 on April 3, 2021
Credit card companies do not allow you to pay off an existing balance with another credit card.
You can move the debit balance from one card to another with a balance transfer but that typically costs 3-5%.
Answered by Bob Baerker on April 3, 2021
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