You could use a money transfer credit card pay off a stubborn overdraft or get an interest free cash loan. Money transfer cards offer 0% interest periods for transferring money from your credit card to your current account. Compare money transfer cards from four companies below.
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A money transfer card enables you to transfer money from your credit card to bank account, effectively giving you a small cash loan.
A credit card money transfer works in a similar way to a balance transfer credit card, only it transfers money into your bank account instead of to your credit card. You are then in debt on your money-transfer card, however the best money transfer cards have 0% interest periods lasting over two years.
Although you will have to pay a fee to transfer the money, which will be around 1% to 3% of the money transferred.
You can use it to pay off overdrafts that are becoming expensive or to get cash to make a purchase that requires cash, rather than credit. You can also use the money from your current account to pay off loans that have high interest rates.
The 0% interest period on money transfer credit cards allows you to put-off paying interest on your debt, if you can pay back the balance before the interest-free period expires you can avoid paying interest all-together.
Money transfer cards usually trade off the length of the interest free period against the transfer fee, so the longer the 0% period the bigger the transfer fee and vice versa.
So it’s worth working out what’s better for you. Whether a lower transfer fee for a shorter interest free period could save you more money than a longer time spent not paying interest largely depends on how long it will take you to pay off the debt.
If you think you can pay off the debt in a shorter time you’d be better off going for the cheaper transfer fees.
Also, bear in mind that most money transfer cards do not offer interest free purchases for the same period as the 0% balance transfer period.
For example, let’s say you have a debt of £1500. An APR of 20% will add £25 a month onto the debt (or £300 a year). Transferring money from a card for a one-off 3% fee will cost you £45, you can then have a holiday from paying interest for between three months and two years.
Credit card transfers can be an effective way of borrowing small amounts of money over the short term without paying interest. However, typically you will need a good credit rating and make sure to meet the minimum repayments.
If you do not repay the card before the interest-free period expires you will be charged the full interest on your remaining debt.
We compare credit over 100 credit cards from all of the major banks and credit card providers.
However, we do not compare all the credit cards that are available in the UK.
This is because some credit card providers have offers that are only available exclusively through their own website or branch, or through other comparison websites - in the same way some credit cards are exclusively available through uSwitch.
There are also many credit cards that are only available to people in member organisations and clubs.
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