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Can You Pay Interest with A Credit Card?
July 1, 2025
Quick Answer
In short, no—issuers do not permit you to pay a credit card bill, including its interest charges, with another credit card.
Should You Pay Interest With A Credit Card?
Deciding to pay interest with a credit card requires weighing its advantages and disadvantages.
Benefits
- Offers a short-term solution to meet a payment deadline and avoid default on a loan.
- Allows you to earn credit card rewards, such as points or cashback, on the payment.
- Consolidates bills by moving the payment onto your monthly credit card statement.
Costs
- Incurs high interest charges, as credit card APRs are typically much higher than other loan rates.
- May involve processing fees from the lender for using a credit card, increasing the total amount paid.
- Increases your credit card balance, potentially leading to a cycle of compounding debt.
How to Pay Interest With A Credit Card
Carrying a credit card balance means paying interest. While it's best to avoid, understanding the process helps you manage debt and minimize costs. Here’s a general guide to navigating it.
- Review Your Statement and APR: Your monthly statement details your balance, minimum payment, and due date. Locate your Annual Percentage Rate (APR), as this is the rate used to calculate the interest you owe on any unpaid balance.
- Understand the Grace Period: Interest charges typically begin after your statement’s grace period ends. If you pay your entire balance by the due date, you won't be charged interest on new purchases. If you carry a balance, you lose this grace period.
- Choose the Right Card: If you know you'll carry a balance, selecting a card with a low ongoing APR is critical. Some cards are specifically designed for this purpose. You can find potential options using tools like Kudos' explore cards tool.
- How Interest is Calculated and Applied: Issuers generally calculate interest daily based on your average daily balance. At the end of the billing cycle, the total interest accrued is added to your principal balance, which will then compound if not paid off.
- Make On-Time Payments: Always pay at least the minimum amount by the due date. This avoids late fees and protects your credit score. Paying more than the minimum will help you reduce your principal balance and pay less interest over time.
Impact On Your Credit Score
Using one credit card to pay another, typically through a balance transfer, can have several potential effects on your credit score. It's important to understand these impacts before moving forward.
- Credit Utilization Ratio. This action increases the balance on one card, which can raise your overall credit utilization ratio. A higher ratio is often viewed negatively and can lower your credit score.
- New Credit Inquiries. If you open a new credit card for a balance transfer, it will result in a hard inquiry. This inquiry can cause a temporary dip in your credit score.
Alternative Ways To Pay Interest
Direct Bank Payments
Instead of relying on a credit card, interest can often be settled directly from a bank account. This is typically accomplished via an ACH transfer or by using a debit card linked to your checking or savings account. Opting for a direct bank payment can help you avoid the potential for incurring additional credit card interest and offers a straightforward way to manage your obligations without creating new debt.
Payment Schedule Adjustments
Many systems provide flexibility in how you manage payments. You may be able to adjust the payment date to better suit your financial cycle or make manual one-off payments outside of the scheduled cycle. Some platforms also allow for making additional payments toward the principal balance, which can help reduce the total amount of interest you pay over the life of the loan. Exploring these settings can offer greater control over your finances.
Choose the Right Card to Pay Interest
If carrying a balance is unavoidable, the right credit card can save you a significant amount in interest charges. With a database of nearly 3,000 cards, Kudos can help you pinpoint the perfect match for your financial situation. You can compare features and find the best 0% interest cards to minimize costs while you pay down your debt.
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Frequently Asked Questions
What happens if I only pay the interest on my credit card?
Paying only the interest means your principal balance will not decrease, keeping you in debt and costing you more over time.
How is credit card interest calculated?
Interest is usually calculated daily using your average daily balance and the card's Annual Percentage Rate (APR).
Can I avoid interest charges by paying off my credit card?
Yes, paying your statement balance in full by the due date each month allows you to avoid interest charges completely.
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Editorial Disclosure: Opinions expressed here are those of Kudos alone, not those of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.
