Bank transfers and credit cards: a guide on transferring to, from and between credit cards

Can I transfer money between a credit card and bank account?

It’s possible to transfer money from certain credit cards to bank accounts. But it all depends on the type of card you’ve got. It’s also important to be aware that you’ll be charged interest and potentially a fee – typically these charges add up to quite a lot.

You can also withdraw cash and then pay it into your current account or arrange a cash advance. This is when your credit card provider transfers money directly into your account. It allows you to borrow directly from your credit card balance, rather than using your current 2account for purchases. A cash advance is a loan that can’t exceed the current available balance on your credit card and the amount you’re able to transfer from your card will depend on your credit limit.

But the simplest way to transfer funds from a credit card to a bank account is to use a money transfer credit card – specifically designed for this purpose.

Is it a good idea?

When deciding whether to transfer funds from your credit card to a current account, think about the following:

• Remember the money from a credit card is borrowed. Whether you arrange a cash advance or take cash out to put into your current account, you’ll need to pay it back, plus the fees and any interest due. This means transferring money from a credit card to a bank account can be an expensive option when managing your finances.

• You’ll pay interest. If you take money out as cash, you’ll start paying interest from the moment you take the cash (potentially even if you’re still in your 0% interest period). The same happens with a cash advance; there's no grace period like there is with typical credit card purchases.

• It can also damage your credit score. That’s because it can impact your credit utilisation ratio – the amount of credit card debt you have relative to your total credit limit. Using a high percentage of your available credit can be seen as a red flag. Most lenders would prefer you keep the percentage to under 30%.

While transferring money from your credit card can help if you need to make short-term payments, it comes at a high price. Due to the costs that kick in right away, cash advances should only be used for emergencies. It’s best to avoid it if you can – unless you have a money transfer credit card, for which the charges and interest for transferring money are usually lower.

What are money transfer credit cards?

The alternative to cash advances or withdrawing cash from a credit card is to use a money transfer credit card. This allows you to transfer funds from a credit card directly to a bank account for use on purchases and other payments. This can be helpful for one-off purchases, any unplanned expenses, or in any situation where you wouldn’t be able to use your credit card – but need to use the credit card funds.

Typically, you can only send money to your own UK current accounts (you’d need to send remittances to another country in another way), and both interest and fees will apply – however these charges are less than on other credit cards not designed for this use.

Many providers of money transfer credit cards will offer introductory low-interest rates too, or a 0% interest deal for a set length of time, but it’s up to you to remember to clear the balance before the higher rate kicks in.

How to transfer money from a credit card to a bank account with a money transfer card

Exact details may vary depending on providers, but you can normally transfer money from a money transfer card in the following steps:

1. Log on to your online banking account and select the credit card you want to use for the transfer

2. Request the amount you would like to transfer – your account will likely indicate the maximum you can send

3. Provide the account details of where you would like to transfer the money to

4. Read and accept the terms and conditions, including any transfer fees

5. The bank will need to approve the transfer (this may involve some extra security checks)

6. Once approved, the money transfer will be sent to your chosen bank account

While the steps will be similar with an ordinary credit card, as we’ve explored, the charges will typically be more. Once the money is in your account, you can use it however you like.

How long does it take?

How long it’ll take depends on a few factors, namely what bank you’re transferring to/from. You can find the money will arrive in your current account as quickly as the next working day. If you’ve transferred outside of business hours, or have only just applied for your money transfer credit card, it will take longer. With new card applications, banks need to take your credit history before accepting you.

How much can I transfer?

How much you can transfer from a money transfer credit card to a bank account will depend on your individual financial situation and your personal agreement with the bank. There will sometimes also be a minimum amount for the transfer, typically around £100 – plus the fee charged.

How to choose a money transfer credit card

If you feel like a money transfer credit card is right for you, you’ll want to find a good deal when choosing one. There’s two things to consider:

• The length of the interest-free period. This means as long as you pay the balance off by the time the low-interest period ends, you won’t have to pay any interest on the amounts you transfer. You can find 0% periods up to 18 months, but those deals may charge higher fees.

• The fees charged on making transfers. The amount charged each time you make a transfer will impact the overall affordability of each card.

You’ll want to find the card with the lowest transfer fee with an interest-free period as long as you’ll need to pay back the amount you’re borrowing. This will vary depending on individual circumstances.

What are the alternatives?

Transferring money from your available credit card balance to your bank account seems like a quick and easy way of accessing funds. And it can be, especially with a money transfer credit card. But when you consider the high interest rates and fees that apply, it makes sense to also explore your other options for short-term funds. This could include:

• Using any savings. It may be more cost-effective to use money you have in any savings accounts because you won’t be charged interest – as it’s not borrowing.

• Considering a different type of loan. A personal or secured loan might be a more suitable way of borrowing money at a lower interest rate over a longer period.

• Using your overdraft. It may be cheaper to use the overdraft of your current account in the short term rather than do a credit card transfer.

• Asking friends and family. If it’s a genuine emergency and you can pay them back quickly, it may be an idea to ask friends or family members to borrow money. This will all depend on your relationship with them.

• Checking for any forgotten bank accounts. It sounds surprising, but there are actually billions of pounds in old and forgotten bank accounts. You can use My Lost Account to see if you’ve forgotten any.

Before making any financial decisions, it’s always best to do your research and shop around for the best rates. Also think about why you need the money. If there’s an emergency, it makes sense to find ways to get funds quickly. But if you just want money in your account, the temptation to spend may be greater once it’s transferred into your current account.

If you need to send money to another country, transferring from a credit card may not make sense. WorldRemit can help by allowing you to make bank transfers directly to your family or friends’ bank accounts instantly with better exchange rates and lower fees than most conventional banks and money transfer services. You can find out more about remittances or create an account to start sending money overseas today.

FAQs

Can I withdraw cash from a credit card?

Yes you can, but you will be charged for doing so. You’ll need to factor in the fees to the cost of your repayments. It can be an expensive way of accessing money.

How much will it cost me to use a money transfer credit card?

The fees are typically between 1% and 4% of the amount you’re transferring.

What else should I consider before transferring money from a credit card?

It’s worth noting that a lot of providers won’t let you use this type of transfer to pay off a loan you already owe them.

Will I be accepted for a money transfer credit card?

You’ll need a good credit history to be accepted for a money transfer. Providers will also look at your financial situation and credit record to determine how much you can transfer. If you’re rejected for a money transfer credit card, applying for another soon after may affect your credit score.

This communication is intended for marketing purposes only and does not constitute or provide legal, tax, investment or financial planning related advice.