Can I pay my debts off with a credit card?

Can I pay my debts off with a credit card?

author: Bryony Pearce

By Bryony Pearce

Clearing debts using a credit card is a popular consolidation option, so we’ve taken a look at how it works and what impacts your options.


It might not be what you wanted to hear, but this isn’t a clear-cut yes or no answer. Whether or not you can pay your debts off with a credit card will depend on a) the type of debts you’re looking to clear, b) what type of credit card you’re hoping to clear them with, and c) the health of your credit history.

Types of debt

Loans and mortgages

Not all credit cards allow you to pay off things like loans and mortgages - and that’s one sure-fire way to stop you in your tracks!

So, let’s take a look at the why. In the eyes of lenders, paying off existing credit by taking out even more credit can be seen as risky, because, worst case, it could be the start of a spiral of debt that you’re unable to repay.

That’s not to say no credit card provider will let you pay off things like loans or mortgages, but it’s worth paying attention to when you’re doing your research. If you’re unsure, ask if this is something they allow before you take out the credit card.

Credit cards and store cards

Paying off debts that you’ve built up on things like credit cards and store cards is much simpler, and pretty much all providers will let you do this.

You can pay off these kind of debts using a standard credit card, balance transfer card, or money transfer card.

Your credit history

If you want to take out a balance transfer card or a money transfer card, your credit history will factor into whether or not lenders accept your application, and will also heavily influence whether or not you’re able to benefit from 0% introductory rates.

If you have a poor credit history, it’s unlikely they’ll offer you a 0% interest-free period because, in their eyes, you pose an increased risk of late or non-existent payments.

Your credit history will come into play even if you’re just applying for a standard credit card too. In the first instance, it will impact whether or not you’re accepted full stop. Then, if you are accepted, it will contribute to the interest rate you’re offered – the better your credit history, the better the interest rate you’ll be offered – simple! 

Things to consider

If you’re looking to pay off your debts with a credit card, the first thing to consider is whether or not it makes financial sense. Only you can answer this, but bear in mind things like:

Interest rates

If the credit card you’ll be paying off your debts with has an interest rate attached to it (which, unless you have one with a 0% introductory rate, it will), for the move to be financially effective, you need to make sure it’s lower than the interest you’re paying on your outstanding debt.

If your credit history has gone downhill since you took out the line(s) of credit you’re looking to clear, you may find this difficult to find.

If you are offered a 0% introductory rate, to make the most of it, you should try and clear off your debt before the interest-free period ends. This way, you’ll pay your debts off without having to pay any interest.

Charges and fees

Banks and other balance transfer and money transfer card providers have to make their money somewhere. So, to make up for the money you save on interest during the interest-free period, most of them charge a fee for their service.

For both cards, the fee is usually a percentage of the amount you’re looking to transfer – normally around 3%. So if, for example, you’re transferring a £2,000 debt, the balance transfer fee would be £60 (assuming the lender in question does charge 3%).

Different lenders will have different charges, so it’s really important that you check what this is before you take out any type of credit agreement.

That said though, in comparison to the interest you could end up paying using a standard credit card, the cost of the fee might pale in comparison.

Alternative options

If you’re not convinced a credit card is the right road to go down to pay off your debts, you could consider a debt consolidation loan instead.

Debt consolidation loans come in two forms: personal or secured, and can be used to consolidate various types of debt – like loans, credit cards, store cards, and overdrafts.

Other potential options could be private loans (i.e. lending off a friend or family member) or dipping into your savings. As with paying off your debt with a credit card though, there are pros and cons to all of these alternatives too, and you can see what some of these are here .

Don’t forget: you could end up paying back more by consolidating debts. Also, your home is at risk if you secure previously unsecured (personal) loans against your home.

Disclaimer: All information and links are correct at the time of publishing.

author: Bryony Pearce

By Bryony Pearce

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