A money transfer card allows you to transfer money from your credit card to your debit card. This instrument is particularly useful if you have an overdraft or if you need some cash to make a purchase you cannot afford at the moment.
Normally if have acquired debts from another credit card, you can use a balance transfer credit card to pay them off at zero percent interest. However, with a balance transfer credit card, you cannot transfer money to your credit card.
This arrangement may financially work out better for you compared to paying the debt at the current rate of interest. The benefit is more apparent when dealing with an overdraft where the rate of interest charged is usually quite higher.
How To Transfer Money From Your Credit Card To Your Bank Account
What if you don’t have a money transfer card? Can you use your credit card to transfer money to your bank account? The answer is “Yes”. You can do this by availing of a cash advance which is a ready facility in a credit card.
There will be a trade-off between convenience and the interest amount payable as a cash advance comes with a hefty price tag. Put simply, a cash advance is an expensive way to avail of ready funding.
Once you get a cash advance, the credit card provider will charge you interest from Day 1. Interest charges will continue until the time the cash advance is settled in full. Similarly, the credit card provider will levy interest charges whenever you withdraw cash through your credit card.
How does this work?
Let’s say you withdrew from an Automated Teller Machine (ATM) using your credit card. The credit card provider will charge you a 2% fee for the ATM transaction.
Another thing you have to keep in mind is that when you use the cash advance facility, its APR or Annual Percentage Rate goes into effect. You will be charged every single day until the amount of the cash advance is fully paid back. On average, the APR is between 20% and 30%.
What other credit card transactions will incur charges or fees? The credit card company will apply interest charges and fees whenever you exchange foreign currency at a Forex Center or when using tokens at a casino.
To avoid all of these transaction fees and get the money you need to be transferred from your credit card to your bank account, the money transfer card remains the best solution.
Choosing the Best Money Transfer Credit Card
Likewise, if you are planning to get a loan to acquire an item that you wouldn’t be able to purchase with your credit card such as a car, a money transfer card would be the smarter, more cash flow-friendly option.
Does your credit card provide the money transfer option? If not, consider uSwitch which is one of the best sources for finding the best money transfer cards.
Your best option would be to select the money transfer car that offers the longest zero percent interest payment plan together with the lowest charges for money transfer.
Generally, the total charges for money transfer are lower for money transfer cards that have shorter zero interest payment plans.
Thus, if you believe you can pay back the loan or the advance faster, it might be a better and cheaper option to get the money transfer card that offers a shorter zero interest period and lower charges.
Using Your Money Transfer Card
Transferring money from your credit card to your bank account is easy when you have a money transfer card. The money that is transferred to your bank account can be withdrawn from an ATM without any charges or fees. You can also spend it through your debit card.
Amount You Transfer Matters
How much will you end up paying if you use your money transfer card? The computation shall be based on the amount of money that you borrowed. On top of that, you will be charged a credit card fee.
As an example, let’s assume you borrowed £6,000 that carries a 4% fee. The total amount payable on the money transfer shall be calculated as follows:
£6,000 x 0.04 = £240 (Money transfer fee)
£6,000 + £240 = £6,240 (Total payment)
You can pay the minimum monthly payment which shall be indicated in your statement until the full amount is completely settled.
It would be a good idea to pay more than the minimum monthly payment and settle the entire amount while you are within the zero percent interest period. Otherwise, if the period expires, the money transfer card will calculate your balance based on higher interest rates.
Helpful Tips Before Transferring Credit Card Money
Are you using your money transfer card to cover loan payments or housing amortizations? It would be a good idea to check if you are being charged penalties for early repayment.
Why does this happen? You may think that it is a good idea to pay off larger amounts of the monthly loan so you can settle the obligation right away. However, there are money lenders who have a money payment schedule that they want borrowers to follow.
You may not be aware that you will be charged a penalty for settling your loan earlier than the agreed-upon term.
Before using your money transfer credit card, make sure it has an accommodation for a zero interest payment period. Likewise, check with the card provider if you can settle the full amount in a month.
Are There Other Options To Money Transfer Credit Cards?
Yes, and it is called an overdraft with a current account. This facility can also offer limited interest-free periods and may not include a minimum monthly payment.
Your decision on whether to avail of this facility or not will depend on the amount of money that you plan to borrow. Keep in mind that the portion of the overdraft which is free of interest is not as generous as the credit limits offered on money transfer cards.
As usual, take the time to do some research on overdraft charges to make sure you are not paying exorbitant amounts.
- 1 How To Transfer Money From Your Credit Card To Your Bank Account
- 2 How does this work?
- 3 Choosing the Best Money Transfer Credit Card
- 4 Using Your Money Transfer Card
- 5 Helpful Tips Before Transferring Credit Card Money
- 6 Are There Other Options To Money Transfer Credit Cards?