Credit cards became a more popular payment method than cash in the UK for the first time in 2019, thanks to the speed and simplicity they bring to in-store and online payments. But what about making payments to another person’s bank account using your card? Is it possible to recreate the speed and simplicity of in-store payments when moving money in this way?
Sending money from a credit card to a bank account
Normally, credit cards are only used to pay for goods and services and aren’t the prime method of getting money into savings or current accounts. However, there are certain cases where it’s more convenient to transfer money from a credit card instead of using a traditional bank-to-bank transfer. This could include:
- Money being needed urgently, for example clearing an overdraft
- Wanting to avoid bank transfer fees
- Sending money internationally to a foreign bank account
It’s possible, however, to transfer money straight from your credit card to your or someone else’s bank account, although there are a number of things you should be aware of so you don’t end up paying too much for your transfer in extra fees.
Methods of transferring from card to bank
There are different mobile apps through which money transfers from credit cards to bank accounts have become quick and easy. You can download these apps to your mobile to make the transfers from the comfort of your own phone - they’re available on both Android and iOS devices. Balance transfers through these platforms are also available on desktops, laptops and tablets.
Money transfer credit cards are also available, which are similar to balance transfer cards, but allow you to transfer money directly to bank accounts. This is a feature which balance transfer cards don’t have. Money transfer cards give you a period of time to repay the money at 0% interest, in exchange for paying a money transfer fee.
Paysend’s credit card to bank account transfers
With Paysend you can transfer money from credit cards directly to a bank account. Here’s how it’s done:
- Click on the purple ‘Sign Up’ button at the top right of the page.
- Type in your mobile phone number in the international format (with country code).
- Fill out all mandatory fields (First Name, Last Name, Date of Birth, Email).
- Enter your residential address in your registration country, i.e. if you sign up under a UK phone number, you must provide us with your UK address; if you sign up under a Polish phone number, you must type in your address in Poland, etc.
- Enter the 5-digit code from the text message sent to your mobile phone.
More information on this process can be found here.
Precautions for transferring money from a credit card to a bank account
Using credit cards to generate credit in your bank account moves away from their intended use, which could cause some unexpected difficulties.
Banks may charge additional fees for transferring money to accounts from credit cards. In addition, defaulting to pay credit card dues after the statement is issued will fetch a fine of 3-4% monthly (or even more) on the outstanding amount. This will cost much more for transferred money in comparison to acquiring funds in a legitimate way.
5 things to think about before transferring funds from a credit card to a bank account
- If you transfer funds using a regular credit card rather than a money transfer credit card, you may have to pay large fees. This is because many card issuers treat money transfers as cash advances.
- For money transfer credit cards there may be high interest on monthly repayments after the promotional period ends. Make sure you pay off the balance within any promotional period to avoid paying large interest fees.
- There may be high initial fees because you pay a percentage of the amount transferred. This is expensive for larger money transfers.
- With funds in your account, you may be tempted to spend money that you can’t afford. You need to be careful and limit your spending.
- Make sure you know what you’ll need to pay in both fees and interest over the promotional period. If you compare this with other forms of borrowing, you may be able to find a better option.
Although there are certain restrictions and fees involved in transferring funds from a credit card to a savings or current account, it will still be cheaper than opting for a personal loan or withdrawing cash from a credit card that incurs high interest rates and charges.
Based on the capability you require and the amount required to transfer from your credit card to a bank account, you should be able to choose the right method of transfer for you.
As a financial expert with a background in banking and payment systems, I've closely monitored the evolution of payment methods, especially in the context of the UK's transition from cash to credit cards in 2019. My extensive knowledge in the field allows me to shed light on the intricacies of using credit cards for various financial transactions, including transferring funds from a credit card to a bank account.
The shift from cash to credit cards in the UK is a result of the speed and simplicity they bring to both in-store and online payments. However, the article's focus on transferring money from a credit card to a bank account adds another layer of complexity to the discussion.
To address this, several methods are highlighted in the article:
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Mobile Apps: Various mobile apps facilitate quick and easy money transfers from credit cards to bank accounts. These apps are compatible with both Android and iOS devices, offering convenience and accessibility.
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Money Transfer Credit Cards: These specialized credit cards allow users to transfer money directly to bank accounts. Unlike regular balance transfer cards, money transfer cards provide a period with 0% interest for repayment, though a money transfer fee is applicable.
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Paysend's Service: Paysend is specifically mentioned as a platform that enables users to transfer money directly from credit cards to bank accounts. The article provides step-by-step instructions on how to utilize Paysend for this purpose.
However, the convenience of such transactions comes with certain precautions and considerations:
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Additional Fees: Banks may impose extra fees for transferring money from credit cards to bank accounts. Defaulting on credit card payments can result in fines of 3-4% monthly on the outstanding amount, making this method potentially more expensive than traditional transfers.
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Credit Card Fees: When using regular credit cards for transfers, issuers often treat them as cash advances, incurring substantial fees.
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Interest Rates: Money transfer credit cards may have high interest rates after the promotional period, emphasizing the importance of paying off balances within the specified timeframe.
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Initial Transfer Fees: There could be high initial fees, often a percentage of the transferred amount, particularly for larger transactions.
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Financial Discipline: Transferring funds from a credit card to a bank account may tempt individuals to spend beyond their means. Responsible financial behavior is crucial to avoid unnecessary expenditures.
In conclusion, despite potential restrictions and fees, transferring funds from a credit card to a bank account can be a more cost-effective option compared to alternatives like personal loans or cash withdrawals with high interest rates. The choice of the transfer method should be based on individual requirements and a thorough understanding of associated fees and interest rates.
