You need cash because of an emergency, but you only have your credit card. Can you transfer money from a credit card to a bank account? If this is possible, how do you do it?
You can transfer money from your credit card account to your bank account. You should be able to transfer on your online bank account or over the phone. But you should check with your bank to get the updated information because the daily and monthly limits are different from bank-to-bank.
Are you expecting a refund from a purchase you made with a credit card? You can ask your credit card company to have the balance transferred into your bank account. Some online apps and companies can perform this kind of banking service.
Read on to learn more about transferring money from your credit card account to your bank account, how to make this transfer, and how it affects your financial status.
Transfer Money From Credit Card to Bank Account
If you need cash immediately, can you transfer money from a credit card to a bank account? You should be able to do this through your bank app, online bank account, or by phone.
However, you need to check with your bank because daily and monthly transfer limits are different from bank to bank.
You can do this when you receive a refund from a store due to a credit card purchase. The store can transfer your credit balance to your bank account. Again, you can transfer funds using a banking app or a banking online service.
You can also transfer your credit balance if you use third-party platforms like Paytm, MobiKwik, or Moneygram. It is also possible to convert the credit balance into installments and then pay in convenient equated monthly installments or EMIs.
One of the apps you can count on for this purpose is the MobiKwik e-wallet. You can load this e-wallet with money from your credit card. As soon as the money is in your e-wallet, you can transfer the funds to your bank account.
Get a Cash Advance
Getting a cash advance using your credit card is one of the most used methods of getting immediate cash for emergencies. This option allows you to borrow money directly from your credit card instead of using those funds for buying things on credit.
Of course, a cash advance from your credit card is a loan that you should repay. Additionally, the amount you can transfer cannot exceed the current balance of your credit card. Also, be aware that once you withdraw money from your credit card account, interest will start to accrue right away.
Unlike your usual credit purchases, the company will not give you any grace period for cash advances from your credit card. The process of getting cash from your credit card may also vary with different card issuers.
How to Transfer Money From Credit Card to Bank Account
How to transfer money from a credit card to a bank account? There are several methods available for you to get a cash advance from your credit card account:
Credit unions and commercial banks allow their members to take out money from their credit cards through ATMs. But you can only do this if your credit card has a PIN. If you want the money to be credited into your checking account, you can deposit the cash into your account at the bank or at an ATM that accepts deposits.
2. Convenience Checks
These are the checks that your card issuer sends you. You can treat them as personal checks and use them to pay for items you want to buy or deposit into your bank account. These checks are just like traditional checks, but the money comes from the line of credit of your credit card.
3. Direct Transfer
There are financial institutions that allow direct transfer of funds from credit cards to checking accounts. For instance, U.S. Bank allows you to complete this fund transfer entirely online. However, many card issuers don’t offer this option. This method is convenient, but you could take in more debt if you are not careful than you should.
Withdraw your cash advance by going to your bank’s branch. Once you get the money, you can deposit it into your checking account.
5. Other Options
Aside from getting a cash advance, there are other options of taking out cash from your credit card account and transferring it to your bank account. But note that credit cards are not for this kind of cash transaction. You will pay higher fees for using these options:
Use a Money Order
Taking out a money order is another way of transferring funds from your credit card account to your bank account. Moreover, you can get a money order at a local money-transfer agent, at a supermarket, at a bank, or a US Postal Service outlet.
Money orders are not really that expensive. Afterward, you can deposit the money order into your bank account, either at the bank or at a bank that allows deposits through ATM.
Make a Money Transfer or Wire Transfer
Another way to transfer money from your credit card account to your bank is to make a wire transfer using your bank. But before doing this, ask the bank if it allows credit card payments. Be aware that wire transfers from credit card accounts usually come with high fees.
An alternative method is to use money-transfer services. Companies like MoneyGram and Western Union allow their customers to transfer money using the funds from their credit cards.
Use an App
If you want, you can use a mobile app to transfer money from your credit card account to your bank account. Many mobile apps are designed for this purpose. You can download an app (available both on iOS and Android devices) that you think is the most useful. You can also choose to download these apps to your PC or laptop and do the money transfer there.
Use Money Transfer Credit Cards
Some card issuers offer money transfer credit cards to their cardholders. They are similar to balance transfer cards. However, these MTCCs allow you to transfer funds from your credit card directly to your bank account.
If you use this card to transfer money, they will give you a specific time period to repay the amount without any interest. However, you have to pay a fee for the money transfer service.
Things to Consider Before Transferring Money from Credit Card to Bank
Can you transfer money from a credit card to a bank account? As you can see, it is entirely possible to transfer funds from your credit card directly to your bank account or someone else’s. But before you do that, you need to consider a few things that may affect your finances:
- You will be charged higher fees. Most card issuers treat money transfers from credit cards as cash advances. The typical fee charged in this kind of transaction is 5% of the transaction amount or $10, whichever is greater. So, if you transfer $400, you will be charged a $20 transaction fee.
- The amount you take out will start to accrue interest right away. There is no grace period given to credit card cash advances. The transaction is treated as a loan by card issuers.
- You will be charged with a higher APR. The annual percentage rates for this kind of transaction are usually higher.
- Once the fund is in your bank account, you may be tempted to spend them for other purposes. Be sure that you spend it only for the emergency purpose that it is intended for.
- You need to determine all the fees and interest charges that you need to pay the card issuer over the period of the ‘loan.’
Effect on Your Credit Score
While you can get emergency cash from your credit card, you need to be aware of one thing: it can negatively impact your credit score. So, if you repeatedly do this kind of transaction, it will not do any good to your credit history.
Remember that the amount of your credit card debt in relation to your total credit limit is your credit utilization ratio. This ratio represents 30% of your credit score and the second-most critical factor in your credit score.
Determine your credit utilization ratio by dividing your debt by your total credit limit. If you use a considerable amount of your credit limit, the lender or card issuer may look at this as a red flag.
That is why you should keep your credit utilization ratio to just below 30%. So, if your credit limit is $15,000 and your credit balance is $5,000, if you take out a cash advance of $4,000, your ratio will jump to 60%. If your ratio is this high, it will surely affect your credit score negatively.
If you use Cash App, see our post on how to transfer money from Cash App to a bank account.
Is Transferring Money from Credit Card to Bank Account A Good Idea?
If you will consider all the factors that we have discussed above, the answer is no. It’s definitely not in your best interest to transfer funds from your credit card account to your bank account. That is true in normal conditions.
However, if you really need cash at this very moment and your wallet does not have any cash at all but only credit cards, then, by all means, get a cash advance from your credit card. If it’s an unavoidable emergency, it is better to take in debt than suffer the consequences.
That said, you can still get the best from the situation by thinking first before acting. If you have other options that will mean fewer service charges and less interest, choose those options. Only if you have no other options and the need is already right in your face will taking out a cash advance from your credit card be the best choice.
Other Options to Get Cash If the Need Is Not Urgent
If your need for cash is not really that immediate, here are other methods you can try:
- Consider taking out a low-interest personal loan.
- Open a home equity line of credit.
- Get a new credit card with a 0% interest as its introductory offer.
- You can borrow money from a family member or a close friend.
I want to say that getting a cash advance from your credit card should not be your only option. Certainly, if it’s not an emergency, it should not be your first option. Credit card cash advances come with higher interest rates.
If it takes a long time for you to repay it, you will be on the losing side of the table because the APR for this kind of credit card transaction is really very high. You’ll not be given any grace period, so they will start charging interest right away.
It is not wise to rely on cash advances on credit cards every time you need money. You should only take them out if you really need them for an emergency and if you can repay the amount in just a short time. In this way, you won’t be paying more money in the long run than what you have actually spent.
Conclusion – Can You Transfer Money From Credit Card to Bank Account?
You can transfer money from your credit card account to your bank account if you use a net banking app. You can also do the money transfer over the phone. However, you need to check with your bank and get updated information since the daily and monthly limits are not the same.
It will also be in your best interest if you will do this only in real emergencies. Transferring money from credit cards to bank accounts come with higher fees and higher interest charges. You don’t want to end up paying more for what you have actually spent.