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There could be several reasons why you might want to transfer money from a credit card to a bank account. It could be to cover an overdraft or stop you defaulting on your current account. There are two different money transfer options, paying money into a debit account and paying money into a credit card. We explore the ins and outs of both of those options.
If you are using your credit card to avoid overdraft fees, caused by persistent debt, then you should be aware that there are better, simpler and less stressful options available to you. For example, taking out a debt consolidation loan can be a great way of simplifying your money worries, and enabling you to take control of your finances.
In this article, we'll cover:
What is a money transfer?
A money transfer is when you transfer money from a credit card to a debit card.
What is a balance transfer?
A balance transfer is when you transfer money from a credit card to another credit card.
What is a money transfer credit card?
A money transfer credit card is a type of credit card designed especially for transferring money from a credit card to another bank account. Money transfer credit cards are typically used to pay off overdrafts or other small amounts of debt that is affecting or being taken out of your debit current account.
What is a balance transfer credit card?
A balance transfer credit card is a type of credit card designed specially to transfer funds from one credit card to another. It's used to pay off a credit card balance that may have a high interest or be over the credit limit.
Can I transfer money from my credit card without paying interest?
If you have a 0% money transfer credit card, you will be able to transfer money without paying interest rates. However, usually the interest free period is temporary, and the length will depend on your credit rating. When you apply for a 0% money transfer credit card, they'll check your credit record and let you know how long your promotional interest rate will last for - generally between 9 - 18 months.
After this, you will need to start paying interest. You may also lose your promotional interest rate if you don't pay back the minimum amount each month.
They'll also likely charge you a one-off transfer fee or handling fee - and this fee may be more if your interest free period is longer.
How much money can I transfer from my credit card to my bank account?
How much money you can transfer from your credit card to your bank account will depend on your credit card provider. Your credit card provider will give you a credit limit, this is the maximum amount you can spend.
With a money transfer credit card, you'll probably have two different credit limits:
You'll be given your credit limit when you open your credit account, and it will normally be determined by your credit rating.
Whether you have a money transfer credit card or a regular credit card, they'll charge you a transfer fee. The amount will depend on the type of credit card you have and it's important to check what it is before you make any transfers.
The transfer fee will likely be a percentage of how much you're transferring, meaning the more you transfer, the more the transfer fee will be.
First Time Transfers
If you've opened a money transfer credit card, you may be required to complete your first transfer within a set period - usually around 60 days. You'll still be able to use the card after this time, but the credit card provider may take away your promotional interest rate.
As is the same with any debts, you need to be wary with the amount and ask yourself: can I afford to pay it back? Even if you're transfer funds to cover another debt like an overdraft, it's still important to know whether or not borrowing money is the best option. Using a savings account to repay your debts might be a cheaper option, if that's something that is possible for you.
Check the interest rates on everything. If you're getting out a money transfer credit card, then see how long the interest free period lasts for. If you're using your usual credit card, then make sure you know how much interest rate they charge.
If you're transferring funds to cover another debt, make sure it's worth it. Are the interest rates more or less if you move the debt to a new account?
If you're transferring funds to pay back debts or cover other costs, you might want to consider what alternative solutions there are.
Alternative debt solutions to a money transfer credit card:
There are further alternative solutions, all with their own pros and cons. It's important you research any money transfer credit card or any other solution before signing up.
It is possible to withdraw cash from a credit card. However, it isn't advised. Withdrawing cash straight from your credit account can be very expensive. You'll be charged for withdrawing cash usually a small percentage such as 3% - this is a cash handling fee. On top of this, you may be charged interest as well. The interest rate charged is normally higher on cash withdrawals than on regular purchases.
Key points to take away:
If you're considering money transfer credit cards because you're struggling with more than one debt, it might be worth looking at a Debt Consolidation Loan. You can consolidate unsecured debts and reduce your monthly payment.
Fill in an online application form to see what your monthly repayments could be.Apply Today