Want to know what your options are for transferring money from a credit card to your bank account, including how money purchase credit cards and cash advances work? This guide tells you everything you need to know.
If you need cash in your bank account, using a credit card can be a good approach. Money transfer cards allow you to move funds across quickly and cheaply, and you can even get ones that are interest-free.
If you can’t get a money transfer card, you could use an ordinary credit card and do a cash advance, but this is costly. Most providers will charge you fees and charges for withdrawing the money.
Here we explain all the options, how they work, and any alternatives you need to consider.
A money transfer card is a type of credit card specifically designed to allow you to transfer cash directly into your bank account. This can be really useful if you want to clear your overdraft, pay off debts or pay an unexpected bill.
Depending on the deal you get, you’ll be charged a fee and might have to pay interest. Some cards come with an introductory 0% offer, which means the transfer is interest-free for a set period. That’s why it’s important to shop around. There will be limits on how much you can transfer across - such as 80% or 90% of your credit limit - and, of course, you need a plan to pay off the credit card balance.
Transferring money across is usually quick and easy. Once you’ve logged into your credit card account, look for a money transfer option. If you can’t find it, use the help pages, a chatbot or ring up the company.
Once you’ve selected the money transfer option, you’ll be asked how much you want to move across. There will be a maximum amount you’re allowed to move, which is typically a percentage of your total credit limit. Usually, it will tell you what this is on the page.
You’ll need to provide details of the account you want the money to go into. Most providers insist that this is an account under the same name and registered address as the credit card.
The bank will tell you what the transfer fee is as well as the interest rates and details of the 0% offer if you have one. You’ll usually need to accept some terms and conditions to complete the transfer.
Your credit card provider may need to ask some additional security questions before it can approve the transaction. Once these are completed the transfer will be made. Usually, you can expect to see the money in your account the next day.
Two main factors determine the cost of a money transfer: interest rates, and fees and charges.
You should always try to get a 0% money purchase card if you can. These will charge you 0% interest for a set time, for instance, 18 months. If you pay off the debt within that period, you’ll pay no interest at all. You must make the minimum payment each month or you could lose the introductory offer and end up paying a high rate of interest.
When you sign up for a card, check if there is a deadline for your first transfer. Some 0% cards will say you need to do the transfer within a certain time limit, such as 90 days. If you don’t think you’ll repay what you owe in the offer period, you’ll be switched to a higher rate.
If don’t qualify for a 0% card, look for the best rate available to you. The lower this is, the cheaper your borrowing will be. You should also compare the rate with other products, such as low-cost loans and overdrafts, to make sure a money transfer card is the most cost-effective option.
Fees and charges
There are two main fees to consider:
Transfer fee: This is the amount you’ll be charged for transferring the money. The standard charge is 1-5% of the amount being transferred. The lower this is, the better.
Late payment fees: If you miss a payment, you’ll be charged. The provider should tell you what this will cost before you sign up. If you’ve got a 0% card, missing a payment could mean you lose the offer and end up with an expensive rate.
To get a money transfer card, you usually need to have a good credit score. 0% money transfer cards are typically only available to people with the very best scores. Before you apply, use free eligibility checkers to see what cards you’re likely to be accepted for.
This will depend on your personal circumstances and the card you choose. Most providers will set a maximum transfer value, which is a percentage of your overall credit limit. Many also have a minimum transfer amount, for instance, £100. Make sure you only transfer what you need, and – more importantly – an amount you can afford to repay.
There are two ways to transfer money without paying interest. The first is to get a 0% money purchase card, which means there’s no interest for a set period. This enables you to spread your repayments over several months interest-free.
If your money purchase card charges interest, you won’t pay it if you clear the balance each month. This can be helpful if you have an emergency before payday. For instance, if you need to pay an unexpected bill and the company won’t take a credit card payment. Do a money transfer and as long as you pay it back within the month, no interest will be charged.
If you can’t qualify for a money purchase card, another option is to withdraw money from your credit card and pay it into a bank account. This is also sometimes known as a cash advance.
However, be warned, this is usually extremely expensive, and it leaves a black mark on your credit file. Make sure you’ve explored other options thoroughly before using your credit card in this way.
Yes, and there are several ways to do it. The easiest is to use a cashpoint, but you could also get cashback at a shop or withdraw it from a branch by showing a piece of ID.
There are also some transactions that count as a cash advance. These include paying your mortgage, paying a utility bill, buying foreign currency, buying gift vouchers, gambling or buying lottery tickets.
There are two main costs to consider.
Daily interest: You’ll be charged interest each day from the moment you make the withdrawal to the date when the balance is paid off. This is usually at a far higher rate than the interest you pay on purchases.
Cash advance fee: Many credit card companies also charge a cash advance fee. This is often calculated as a percentage of the sum you withdraw – for example, 3% of the cash advance amount – at other times, it will be a flat rate. You’re charged for each withdrawal, so if you must take money out with your credit card, try and do it all in one go, rather than making multiple withdrawals.
The amount you can take out will depend on your total credit limit and how much of it is left at the time. Lots of banks will have a cash advance limit, which is a percentage of the total credit available.
Before getting a money purchase card or a cash advance, review the other options. The two main ones are using your overdraft and getting a loan. Typically, a money purchase card will be cheaper than an overdraft, unless your bank offers a free buffer where you can go overdrawn without paying interest. Loans are often cheaper than a cash advance, but might be more expensive than a money purchase card. The rates you’re offered and what options are available to you will depend on your financial history and credit rating.