You might be days away from payday when an unexpected expense arises, or perhaps you simply don’t have the time to visit a cashpoint for an urgent financial matter. Whatever the case, if you don’t have cash to hand, it’s still possible to send money to a friend or family member using a credit card.
Money transfer services, such as Remitly, make it easier to send funds overseas using a credit card as well. Whether you’re transferring money domestically or internationally, this guide will help you navigate the process.
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Sending Money from a Credit Card to a Bank Account
Before transferring funds using a credit card, it’s important to understand how banks and lenders treat these transactions. Most financial institutions consider transfers of this kind as cash advances. A cash advance is essentially a short-term loan taken from your credit card balance. While convenient, cash advances typically come with a higher interest rate compared to regular purchases. In addition:
- Cash Advance Fees: Your lender may charge a fee, either as a percentage of the transfer amount or a flat fee – whichever is greater.
- Interest Costs: Interest on cash advances often starts accruing immediately, unlike purchases that benefit from a grace period.
Given these costs, it’s often cheaper to wait and use a debit card for money transfers instead. Debit cards draw directly from your current account, so you can only spend what’s available (barring overdraft fees). Additionally, note that cash advance limits are usually lower than your overall credit card limit, so you may not be able to transfer large amounts in one go.
Using a Credit Card to Transfer Money Domestically
Many online platforms allow you to send money domestically, but not all support credit card payments. For example, UK-based payment services like Monzo or Zelle often only accept debit cards and bank transfers.
Frequently Asked Questions (FAQs)
Can I Send Money From a Credit Card to Someone’s Bank Account?
Yes, you can transfer money from a credit card to someone’s bank account, but most financial institutions treat this as a cash advance. This means you’ll likely incur a fee and higher interest rates compared to regular card purchases. It’s best to use this option as a last resort due to the added costs.
Is it Safe to Send Money Using a Credit Card?
Yes, reputable platforms such as Remitly use advanced security measures to protect your financial information. However, always verify the legitimacy of the service and ensure you’re sending money to trusted recipients.
Are There Any Alternatives to Using a Credit Card for Sending Money?
Yes, alternatives include:
- Debit Card Transfers: Often cheaper, as they don’t incur cash advance fees.
- Bank Transfers: Direct transfers from your current account via online banking or apps.
