Money transfer credit cards – sometimes referred to as cash advance cards – allow you to freely move money from the card to your current account.
Many money transfer credit cards offer 0% interest on money transfers for up to 40 months after you have taken out your card. This interest-free period will vary from card to card.
As with any type of lending, there will also be an APR attached to your money transfer card. This will also vary from lender to lender.
While one of the key benefits of a money transfer card is that it allows you to transfer money to your account, be mindful that once your interest-free period is over you’ll be charged a fee for doing so – and some transfer fees are as much as 4%.
How does the transfer fee work?
If you’re transferring money from your card to your account with a transfer fee of, for example, 4%, this will be added to your total balance.
So, if you were to transfer £400 from your money transfer credit card to your current account, the total balance would be £416 – an interest fee of £16, the equivalent of 4% of the sum you’ve transferred.
Things to look out for
If you’ve been accepted for a money transfer credit card, there are a few things to look out for.
At the very least, make sure you meet the minimum repayments each month. Failure to do so will affect your credit history.
Be aware of when your interest-free period ends to ensure you don’t accidentally rack up more interest charges than expected.
Don’t transfer over more money than you can afford to repay in the long term.
Am I eligible for a money transfer credit card?
There are a number of factors that will determine whether or not you’re accepted for a money transfer credit card. Your credit history, employment status and annual income will all play a part.
If you’re rejected, try to avoid applying for another too soon as this will show on your credit history. Lots of applications may make you appear desperate to lenders, which could reduce your likelihood of being accepted in the future.
What if I don’t have a money transfer credit card?
If you’re thinking of using your credit card to take out cash, it is possible to use your credit card to make a withdrawal from an ATM machine. However, this is best avoided.
Withdrawing cash from an ATM using a standard credit card has two major disadvantages.
The first drawback is that your credit card provider will charge you. Unlike when you use a debit card, your withdrawal will cost you.
And the second disadvantage is that the withdrawal will leave a mark on your credit history. This may make current and future lenders view you as desperate to access cash.
The rules relating to withdrawing cash from an ATM vary depending on the credit card provider. However, it’s always better to withdraw it with your debit card rather than your credit card.
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Intelligent Lending Ltd (Credit Broker). Capital One is the exclusive lender.