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Money transfer credit cards

Find out how you can move cash from a money transfer credit card into your bank account to help manage your finances[1]

What’s a money transfer credit card?

It’s a type of credit card that allows you to move money from your credit card into your current account.

A money transfer credit card is typically used to help clear bank overdrafts, cover the cost of bills, or make cash-only purchases.

Some of these cards come with an introductory interest-free period, so you’ll have some time to repay the amount you’ve borrowed without incurring interest.

Key points

  • The charges for transferring money with a money transfer credit card are cheaper than a normal credit card
  • You’ll need to have a good credit rating to be eligible for a money transfer card
  • Most will have an introductory low or no-interest period, but only for a limited time
  • Transfer fees will apply and you should aim to repay the balance before the low-interest period ends

Can I transfer money from a credit card to a bank?

Yes, you can do this with certain credit cards as a way of providing a cash loan when you need it.

There’s often a transfer fee involved, but if you take out a money transfer credit card with a 0% deal the loan will be interest-free for a set period.

Once the money’s in your account you can use it for whatever you like - from paying off debts to making big purchases like buying a car. Just be sure that you can afford to pay back the amount you’re borrowing – plus any interest – before you use it.

How does it work?

If you were to just withdraw cash using your credit card - and then pay it into your bank account - you’d usually be charged expensive interest and fees from your card provider.

A cheaper alternative is to use a low-interest money transfer credit card to make a cash transfer.

You’ll need to go through your card provider and you’ll typically be able to transfer around 90% to 95% of your credit limit. It's good to keep in mind however, that reaching your credit limit might have an affect on your credit utilisation level - the percentage of credit that's available to you - and consequently, your credit score. Most lenders prefer that you keep your credit utilisation level under 30%.

Most cards require you to make the money transfer within 60 days of opening the account. And there’s often a transfer fee of around 1% to 4% of the total amount.

To keep the low interest rate you’ll need to pay the minimum amount each month. And remember to clear or transfer the card balance before the higher rate begins.

What can you use a money transfer card for?

While it’s important to be careful when you’re borrowing money, a money transfer card can be particularly helpful if:

  • You’re paying off a loan with a high rate of interest
  • You need to pay off an overdraft
  • You suddenly have an unplanned expense like your car needing some expensive repairs, but you don’t have enough money in your account
  • Your bank balance is low and you need to pay for services or goods from somewhere that doesn’t accept credit cards
  • You need to make a large cash purchase, like buying a car

If you choose a money transfer card with a 0% interest deal, it’ll allow you to repay the loan without needing to pay any interest for several months.

But it’s important to pay off the money you’ve borrowed before the interest kicks in, so it’s best to set up a direct debit or standing order to help you do this.

What’s the difference between a balance transfer and a money transfer?

Although these terms sound quite similar and are both ways to manage and use credit cards, they’re actually quite different:

Balance transfer

With a balance transfer, you’re moving your balance to a different credit card that has a lower interest rate. In other words, you’re moving the debt from one card provider to another.

You’d typically do this when the low-interest period on your existing card is about to end, or if your card has a high-interest rate.

Transferring your balance to a card that has a low or interest-free period can help you chip away at paying off the balance much more quickly.

Money transfer

A money transfer is a way of using your credit card to transfer money directly into your current account.

You might do this if you need to pay off an overdraft or clear other debts, or if there’s a big unexpected cost you need to pay for.

You’ll need to contact your card provider to make the transfer and they’ll usually charge a fee to do this.

  • What are the advantages of a money transfer card?

    A money transfer card can be a good option for borrowing money and helping you to lower the amount of interest you’re paying, so what are the other benefits?

    • Money can be transferred as soon as the next working day, so it can be easier to organise than an overdraft
    • You can usually get up to 18 months at 0% interest
    • It can help to pay off expensive debts more quickly and save you money
    • During the interest-free period it’ll be cheaper than using an overdraft which can charge up to 40% interest, daily or monthly
    • It can be a more affordable way to fund purchases
    • When credit cards aren’t accepted you can use the transferred cash instead
  • What are the downsides to a money transfer card?

    As with any credit card, it’s important to weigh up the pros and cons. So here are some other factors you should take into consideration:

    • You’ll need a good credit history to be accepted for a money transfer credit card
    • The introductory low interest rate will only last for a limited period of time
    • Your credit limit might prevent you from transferring as much money as you need
    • A missed payment could mean your lower rate is replaced with the standard rate
    • You won’t get payment protection from the Consumer Credit Act 1974 for any goods or services you buy with a money transfer
    • There’ll often be a high APR if you make a purchase with the card itself
    • Most money transfer credit cards charge a fee to make the transfer

How can a money transfer card save me money?

With a 0% interest deal, you can transfer cash to yourself to help pay off expensive loans and debts with higher levels of interest.

By reducing the interest you’re paying, you can save money and pay off debts earlier.

But the key to saving money is to only transfer the amount of cash you need and to pay off your balance before the low-interest period ends.

To help you do this, divide the amount you’ll be transferring by the number of months in your low interest period to work out what your monthly repayments need to be.

Is a money transfer card bad for your credit rating?

No, taking out a money transfer card in itself won’t affect your credit rating.

However, as with any other type of card, if you’re late with repayments or miss them this is likely to have a negative effect on your credit score.

Worse still, if you miss a payment it can also mean you lose your 0% introductory offer, so you could end up being charged a much higher rate of interest.

How to apply for a money transfer card

Firstly, do your research beforehand by shopping around and comparing different cards and providers to see what option will be best for you.

And you’ll need to work out whether you can afford the fees and minimum repayments.

You should be able to apply for a money transfer credit card on any provider’s website, or by speaking to them in branch or on the phone.

You’ll need to have a good credit rating and be able to supply personal details and information about your financial circumstances, as well as providing proof of ID.

How long does a money transfer credit card application take?

This depends on things like your credit history and the provider’s eligibility criteria. But generally, online applications happen more quickly than if you applied in a branch or by post.

Many providers offer instant approval when you apply online, but some could take five to 10 days to decide whether an application is accepted.

Once your application is approved the money can be transferred into your account in the next few days.

[1]Gocompare.com introduces customers to Runpath Regulated Services which is authorised and regulated by the Financial Conduct Authority. Gocompare.com's relationship with Runpath Regulated Services is limited to that of a business partnership, no common ownership or control rights exist between us. Please note, we cannot be held responsible for the content of external websites and by using the links stated to access these separate websites you will be subject to the terms of use applying to those sites