Can you transfer money from a credit card?
You can use a money transfer from your credit card to move credit into your current account if you need to borrow a small amount to repay a debt or clear your overdraft.
If you have a credit card, you might be wondering whether it’s possible to transfer some of your available credit from your card into your bank account.
Whatever the reason, whether you want to clear your overdraft or you need it for something else, transferring money from your credit card to your current account is possible. There are different ways to do it and it does depend on the credit card you have.
Transfering funds with a money transfer card
If you have a specific money transfer credit card, then you have the right card for the job. Having a card dedicated to money transfers is the simplest way to transfer money as they’re designed for this purpose. It also means the charges and interest associated with transferring money are lower than other credit card types.
If you’ve got a special money transfer credit card, you’re in luck. This is the simplest way to transfer funds from a credit card to a bank account, as it’s been designed for this purpose. That means the charges and interest for transferring money are usually lower.
The alternative to transferring money into your current account is withdrawing cash from an ATM using your credit card. The money could then be deposited into your bank account. It’s important to note, however, that cash withdrawals using your credit card can be expensive. Typically, you’ll also start paying interest on the amount as soon as you withdraw the cash, there may be fees associated with money withdrawals too. This is usually still the case even when you’re still in your 0% interest period.
If you can, you should avoid making a cash withdrawal on your credit card.
This method of borrowing money is most commonly used for paying off an overdraft or debt.
What is a money transfer credit card?
A money transfer credit card is a card specifically designed for paying cash directly into your current account.
Some money transfer credit cards come with a 0% interest introductory offer while others charge interest. However, it’s important to note that your card provider might still charge a fee for each transfer.
As you would with any other credit card, once you’ve used your card and have a balance greater than £0 you’ll have a minimum repayment amount that you have to pay each month. Alternatively, you may choose to clear the full amount each month. If you miss a minimum payment, it will be marked on your credit report and you’ll likely also be charged a late payment fee.
How much can you transfer?
The amount of money you can transfer from your credit card to your bank account will entirely depend on your agreement with your lender.
When deciding how much you can transfer they’ll look at your financial situation and you’ll be given an overall credit limit and separately you’ll be given an amount you can transfer into your current account. This transfer amount if usually a percentage of your overall credit limit.
You’ll likely also be charged a fee to transfer money and this is typically a percentage of the amount you transfer.
For example, if you’re transferring £1,000 and the fee was 3%, you’d pay £30 for doing the transfer. Your balance would then be £1,030 (if you had nothing else outstanding on the card). The fee for money transfers tends to be somewhere between 2% and 4%.
Choosing a money transfer credit card
The key is finding a good deal when you’re choosing a money transfer credit card.
Usually you’re given a set amount of time in which you can repay the amount transferred without paying any interest, though there will usually still be a transfer fee.
It’s important to note also that the longer the interest-free period lasts, the higher the transfer fee is likely to be. The longest 0% period you can typically find is about 18 months.
If you can, it’s in your interest to choose a 0% interest money transfer card. You’ll also need to figure out how long you need to clear the debt when selecting a card, so have your budget in mind. If you select a card with a short 0% interest period, you’ll have to repay more each month to clear the debt before the 0% period ends.
However, keep in mind that because longer 0% interest periods tend to come with higher transfer fees it’s a balancing act between having long enough to clear your debt and paying a lower fee to transfer the money in the first place.
Things to consider before transferring funds from a credit card
Transferring funds from your credit card to your bank account is something that needs to be carefully considered. Before committing, you should consider:
Fees - typically fees are a percentage of the transfer amount, meaning the more you transfer the higher the fee will be. Check fees carefully to find out how much you’ll pay before you do a transfer.
Interest rates - if you have a 0% interest rate money transfer deal, you need to check how long the 0% period lasts. You should also check the interest rates after the 0% period ends as it’s likely to be exceedingly high.
Other options - a loan or using your overdraft are alternatives to money transfers from a credit card. However, you should look at all options to determine the most cost effective route.
Temptation to spend - consider why you are transferring money into your account and how much you need to transfer. Once it’s in your account is there going to be a temptation to spend on unnecessary purchases?
First transfer timeline - money transfer credit cards usually have a transfer window to lock in your 0% rate. For some cards this window is as short as 60 days, meaning if you don’t transfer within 60 you could lose your 0% offer.
What are the alternatives to money transfer credit cards?
- Cash withdrawal
You could do a cash withdrawal from your credit card however, it’s important to note that cash withdrawals are expensive. You’ll likely be charged a fee and you’ll start being charged interest on the amount as soon as it’s withdrawn.
Alternatively, you could take out a loan or use your overdraft. But it’s important to review the interest rates of these options, as well as how long you’ll need to repay the amount borrowed.
Overdrafts are typically an expensive method of borrowing money, so it’s important to look at your own financial situation to determine the most cost effective route for you.
Depending on the type of loan you look at, you might have to secure it against your home or another asset of value. Transferring money from your credit card can be less risky than a loan.
Compare credit cards