What are money transfer Cards?

 

Money transfer cards are credit cards that offer their holders the ability to transfer money directly into their current account from their credit card.

Of course, all credit cards enable their holders to withdraw money directly from an ATM, so using a credit card to get money is not new. Where these products differ is that they enable people to access money from their credit card without incurring a prohibitively high ‘cash advance’ fee and interest rates. Indeed, in most instances, money transfer credit cards offer people access to money at the same 0% interest rate that they might expect from a traditional balance transfer credit card. In fact, the transfer and associated transfer fee is almost identical in terms of offer structure between balance and money transfer cards. What can money transfer cards be used for?

In the same way that 0% balance transfer cards are used to save money by minimising the interest payable on pre-existing credit card debt; money transfer cards can be used to save money on debts that were not accrued on credit cards, like expensive bank overdrafts or personal loans.

They can also be used to boost an individuals’ current account balance when necessary - perhaps for emergency repairs or even a vacation.

How to transfer funds from credit card to bank account

Although the number of credit cards offering money transfers is increasing rapidly, it is still the case that only a minority of cards offer money transfers, so it’s important to first ascertain that a particular cards offers the feature.

Having ensured that a particular card offers money transfers, the process for completing them is very similar to balance transferring. Some issuers offer an online interface as part of their online banking portal, where customers can enter the relevant current account number and sort code, but it is often easier to phone the issuer direct to arrange the transfer.

Card holders are usually prohibited from transferring their entire balance to their current account. The maximum money transfer is usually capped at around 90% of the total credit limit.

How long do money transfers take?

The time needed to transfer monies varies slightly from issuer to issuer, but most transfers are completed within 2 working days of the request.

Sometimes additional checks are undertaken to ensure that the transfer request came from the card holder, which can add delays to the process.

What do money transfer cards cost?

Most money transfer credit cards do not incur an annual fee. However, money transfers are not free. In the same way that a transfer fee must be paid for balancing transferring, so money transfers incur a fee for processing a transfer.

Money transfer fees are usually higher than the equivalent balance transfer fee. They range from 1%-4% of the amount transferred, and like balance transfer fees they do not need to be paid up front - They can be added to the overall customer balance.

Who can get a money transfer card?

Money transfer credit cards are usually only available to people with good or excellent credit history.

Although a number of credit cards for bad credit now offer their users some of the benefits traditional associated with prime credit cards, no bad credit issuers currently offer money transfers. The only way users of these cards can access cash is via cash advance. Cash advances can seem expensive when compared with standard purchase interest rates, but most are still considerably cheaper than pay-day loans and other short term borrowing alternatives.

Money transfer card considerations

Although money transfer cards can be a valuable tool, there are facets of these products that customers should familiarise themselves with before making an application or transferring from an existing card.