Can You Use Your Card to Pay off Someone Else’s Debt
The above sounds simple – you would enter your information and make his payment but it isn’t quite that easy. If you are paying the debt in full a lender may say YES.
However, most monthly payments to credit lenders must be made with a check, cash or ACH transfer from your bank account.
If you pay off debt with someone else’s card you are only using other people’s money and transferring debt form one card to another. Lenders are not often willing to accept such a transaction.
Checks and Cash Advance
If you have a credit account in good standing your lender may send checks to you to use as you see fit. The checks are cash advances on your spending limit for your credit account.
Lenders have not been using this tactic frequently since the new credit regulations took effect in early 2010. However, it is likely to become common again in the next few months as lenders strive to add more consumer debt (and profit from interest) to their portfolios.
If you receive an offer of checks to use as you wish, it accompanies a special agreement that keeps the amount drawn by check to the same interest rate as your credit card purchases. This avoids the higher APR charged if you take a cash advance but offer the same benefits.
By cashing one of these checks you can use your card to pay off someone else’s credit card. The other person’s lender will not know the transaction is actually moving debt from one account to another.
Balance transfers are common in the credit card industry and are a great method to attract new customers to banks. If you have an open line of credit on a card that is sufficient to pay the debt of the other person you can take a cash advance.
That will leave you, however, with the higher interest rates banks charge for cash advance transactions. As long as you are creditworthy, it can be a simple matter to apply for a new 0% introductory rate credit account and transfer the high APR balance to the new account.
Before you plan to use this method, be certain balance transfers that are cash advances will quality for the 0% introductory rate period and know exactly what the rate will be once the introductory period has expired.
Contacting The Lender
If the other person has lost income or is having problems paying their monthly payment, the lender may be willing to take your credit card as payment and close the account. If you are asking about making occasional monthly payments, it is unlikely any bank will allow you to use your card for the purpose.
The answer to whehter you can use your credit card to pay of someone elses card is a resounding “maybe”. It depends on your credit rating and the credit of the other person. It depends on the lender’s ability to work with you and your ability to find ways around the problem that will provide the result you want.