Put simply, a money transfer credit card allows you to move money from your credit card directly into your chosen current account. There are a few reasons why you might do this such as needing funds to cover a purchase or an unexpected bill. Any funds you transfer would then be added as a balance on your credit card which you would need to pay off in the usual way.
We’ve taken a look at the key differences between debit and credit cards and put together this handy guide to give you more information on what to be aware of.
How do money transfer credit cards work?
Money transfer credit cards work by allowing you to transfer money from your credit card to a bank account. This is different from a balance transfer credit card, where you transfer the balance from one credit card to another.
In simple steps, here’s how it works:
- You search for a credit card in the usual way. You can use a money comparison site or go straight to a bank or credit card provider.
- You can look specifically for money transfer cards in the same way you can search for balance transfer credit cards or a card that offers 0% on purchases.
- Once you have found a money transfer credit card, check whether there is an introductory offer that offers 0% interest on transfers and also if there is a fee to pay for making a transfer.
- You’ll be able to say which account you want to transfer to so you’ll need account details like your account number and sort code.
- If your application is successful, you will usually be offered a credit limit. Check if this is sufficient for your needs.
- Money transfers can be fairly quick, sometimes the next day after your application is approved.
What you can use a money transfer credit card for
Depending on your circumstances, there are a few situations where a money transfer credit card could work for you:
- You need to fund a large purchase.
- You have an unexpected bill to pay.
- You are doing some home improvements.
- You have an emergency and need funds at short notice.
It’s important to carefully consider whether a money transfer credit card is right for you, especially when you factor in any fees or charges you may need to pay. Some cards offer a 0% interest rate for a specific period, but if you’re not able to clear the balance within this period, you’ll be charged interest on this amount.
Money transfer credit cards – features and points to consider
You might find that there are a lot of money transfer credit cards on offer. Here’s some useful information on features and some points you should consider:
- Some cards offer a 0% interest rate for transfers made within a specific period of time.
- You may find a money transfer credit card has a lower interest rate or Annual Percentage Rate (APR) than a personal loan.
- It could be cheaper to use a money transfer card to pay off an overdraft, compared to the interest and other fees charged on the overdraft.
Points to consider
- You may be charged a one-off fee for the transfer by the credit card provider. This is usually a percentage of the amount you are seeking to transfer.
- Some money transfer cards have a higher rate of interest for purchases.
- Similarly, you may get charged interest for any cash withdrawals.
- You might find that the credit limit isn’t high enough for the amount you need to borrow.
- Check the card's features, interest and terms carefully before you apply. you'll need to establish whether you can afford to pay off the debts before the 0% period is up or you risk hefty interest fees.
How to choose a money transfer credit card
It’s important to know all your options when choosing any credit card. Money transfer cards are same, so you may find important differences between the cards offered by different card providers. Here’s some tips for choosing a money transfer credit card:
- If a card is offering 0% interest on money transfers, make sure to check the time period for the offer. You can work out how long it would take you to pay off the transfer amount to make sure you don’t get charged interest.
- If you are borrowing to pay off other debts, check the credit limit to make sure it is high enough for your specific needs.
- Most cards will come with a fee for the transfer. You should check how much this would cost before applying for a card.
- Once you find a card, you might need to do your transfer within a certain length of time.
- Make sure you are able to pay back the amount you are transferring. Only borrow what you need and have a plan for how to repay before interest kicks in.