How to Transfer Money from Credit Card to Bank AccountIt is possible to transfer money from a credit card to a bank account, but there are cheaper, more credit-friendly ways of approaching overdraft debt.
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.
Can I transfer money from a credit card into a bank account?
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.
How to transfer money from a credit card to a bank account?
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:
- An overall credit limit - this is the maximum amount you can spend
- A money transfer limit - this is a percentage of your overall credit limit and it's the maximum amount you can transfer
You’ll be given your credit limit when you open your credit account, and it will normally be determined by your credit rating.
What should I look out for when transferring money from a credit card to my bank account?
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:
- A Debt Consolidation Loan - this is a type of loan designed to cover all your debts. You borrow enough money from a Debt Consolidation Loan company, use that money to repay your debts and then just pay back one monthly payment to your Debt Consolidation Loan company.
- An Individual Voluntary Agreement or IVA - this is a formal agreement between you and your creditors where you agree to pay back a certain amount each month. It lasts 5-6 years and you're legally bound to make the repayments. At the end of the set period, you may be able to write off any left over debts.
- Debt Management Plan or DMP - this is an informal agreement between you and your creditors. You work with a DMP provider to create a viable budget and propose an amount, less than you're currently paying, to pay back to your creditors. You'll continue the repayments until your debt has been fully paid.
- Savings accounts - If you have savings, you may be reluctant to use them to pay back debts, but this could be the cheapest and fastest way to get out of debt.
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.
Can I withdraw cash from a credit card?
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:
- The best way to transfer money from your credit card to your bank account is to get a money transfer credit card
- If you want to transfer funds between credit accounts, look into a balance transfer credit card
- However, both of these options might not be the best choice for paying off debts or an overdraft
- Look at all the debt solutions available before signing up to anything
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.
APRs from 5.8% to 89.9%
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Unsecured Loan Representative 69.9% APR
Borrowing £7,500 over 36 months, repaying £502 per month, total repayable £18,083. Total cost of credit £10,583. Interest rate 69.9% (variable). The lenders on our panel offer loans for 12-60 months, with rates from 5.8% APR to 89.9% APR. The Representative Example is based on all loans paid out by lenders between 19th Apr 2022 and 23rd Dec 2022.
Secured Representative 11.7% APR
If you choose to add fees to the loan: Assumed borrowing of £25,000 over 120 months, plus a broker fee of £2,500 and a lender fee of £250 would result in monthly repayments of £345.55, the borrowing rate is 8.6% (variable), the APRC is 11.7% (variable), total charge for credit £16,466.00 and the total amount payable £41,466.00. You can opt to pay the lender and/or broker fees upfront, your adviser will discuss these options with you.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any debt secured on it. All rates vary subject to loan amount, loan type and status. Repaying your debt over a longer period of time may increase the amount you pay.