In times of financial emergencies, you may find yourself in need of quick cash. One option is to transfer money from your credit card to your bank account. While this can provide temporary relief, it’s important to understand the process, costs, and potential impact on your credit score before proceeding.
Transferring funds from a credit card to a bank account is essentially borrowing money from your credit card issuer. The funds are deposited directly into your bank account, which you can then use for various purposes. However, this convenience comes at a cost.
There are several methods to transfer money from your credit card to your bank account:
- Money transfer credit cards
- Cash advances
- Balance transfer cheques
- Third-party money transfer services
Let’s explore each of these options in detail.
Money Transfer Credit Cards
A money transfer credit card allows you to directly transfer funds from your credit card to your bank account. To do this, log in to your online banking portal, select the credit card, enter the transfer amount, and provide your bank account details.
Money transfer credit cards typically charge a one-time transfer fee, usually around 4% of the transferred amount. Some cards may offer introductory interest-free periods or lower rates, which can help manage the cost of borrowing.
For example, if you transfer ₹50,000 from your credit card to your bank account with a 4% transfer fee, you’ll be charged ₹2,000 upfront. If your card offers a 0% introductory APR for 12 months, you can repay the borrowed amount without incurring additional interest charges during that period.
Cash Advances
A cash advance is a short-term loan from your credit card issuer, allowing you to withdraw cash against your credit limit. You can obtain a cash advance at an ATM using your credit card and PIN and then deposit the cash into your bank account.
However, cash advances come with higher interest rates compared to regular credit card purchases. Additionally, a cash advance fee, typically 3% to 5% of the borrowed amount, is charged.
| Cash Advance Amount | Cash Advance Fee (3%) |
| ₹10,000 | ₹300 |
| ₹25,000 | ₹750 |
| ₹50,000 | ₹1,500 |
It’s crucial to repay cash advances promptly to minimise interest charges and avoid falling into a debt trap.
Balance Transfer Cheques
Balance transfer cheques, traditionally used to transfer balances between credit cards, can also be used to deposit funds into your bank account. Simply fill out the cheque with your account details and deposit it like a regular cheque.
Balance transfer cheques often come with fees ranging from 3% to 5% of the transferred amount. Some credit card issuers may offer promotional APRs on balance transfers, which can help reduce the overall cost.
Consider this scenario: You receive a balance transfer cheque with a 3% fee and a 0% promotional APR for 6 months. If you transfer ₹30,000 to your bank account, you’ll pay a ₹900 fee upfront. By repaying the amount within the promotional period, you can avoid additional interest charges.
Third-Party Money Transfer Services
Third-party money transfer services like Western Union or Paysend allow you to transfer money from your credit card to any bank account. These services can be accessed online, through mobile apps, or at local agent locations.
To transfer funds using these services:
- Create an account with the service provider.
- Enter your credit card details and the recipient’s bank account information.
- Specify the transfer amount and complete the transaction.
Be aware that third-party money transfer services may charge additional fees for using a credit card, and the exchange rates may not be as favourable as with other methods.
Considerations When Transferring Money
Before transferring funds from your credit card to your bank account, consider the following:
- Fees and charges: Assess the transfer fees, interest rates, and potential ATM charges associated with each method.
- Credit limit: Ensure that the transfer amount falls within your available credit limit to avoid over-limit fees.
- Interest-free periods: If available, take advantage of interest-free periods to manage the cost of borrowing. However, make sure to repay the amount within the specified timeframe.
- Credit score impact: Regularly transferring money from your credit card to your bank account can increase your credit utilisation ratio, which may negatively impact your credit score. High credit utilisation suggests financial strain and can make you appear risky to lenders.
- Repayment plan: Before transferring money, create a repayment plan to pay off the borrowed amount as quickly as possible. Treat the transferred money as a short-term loan rather than additional income.
Airtel Finance: Your Partner in Money Transfers
Airtel Finance offers a range of financial solutions to help you manage your money effectively. With the Airtel Thanks app, you can seamlessly transfer money from your credit card to your bank account, track your expenses, and monitor your credit score.
Credit cards offered by Airtel Finance come with attractive features like cashback rewards, low interest rates, and flexible repayment options. By using your Airtel credit card responsibly and making timely payments, you can build a strong credit history and improve your credit score over time.
Summing Up
A fund transfer from your credit card to your bank account can be a quick solution to financial emergencies. However, it’s essential to weigh the costs and potential impact on your credit score before proceeding. By understanding the various methods, fees, and considerations involved, you can make informed decisions and manage your finances effectively.
Remember, transferring funds from your credit card should be a last resort rather than a regular practice. Focus on building an emergency fund, creating a budget, and exploring other financing options like personal loans or fixed deposits for more sustainable financial management.
Airtel Finance is here to support you in your financial journey. Download the Airtel Thanks app today and explore our range of credit cards tailored to your needs. With responsible credit habits and the right financial tools, you can achieve your goals and secure a stable financial future.
FAQs
- How long does it take to transfer money from a credit card to a bank account?
The transfer time depends on the method used. Money transfer credit cards and third-party services usually process transfers within 1-2 business days. Cash advances and balance transfer cheques may take 3-5 business days to reflect in your account.
- Can I transfer money from my credit card to another person’s bank account?
Yes, you can transfer money from your credit card to another person’s bank account using third-party money transfer services or by adding them as a beneficiary in your online banking portal.
- Is it advisable to transfer money from a credit card regularly?
No, transferring funds from your credit card regularly is not advisable, as it can lead to high-interest debt and negatively impact your credit score. It should be used only in emergency situations and repaid promptly.
- What happens if I can’t repay the transferred amount on time?
If you can’t repay the transferred amount on time, you’ll incur high-interest charges on the outstanding balance. This can quickly snowball into unmanageable debt. It’s crucial to create a repayment plan and prioritise paying off the borrowed amount.
- Are there any alternatives to transferring money from a credit card?
Yes, alternatives to transferring money from a credit card include personal loans, fixed deposits, borrowing from friends or family, or using your emergency fund. These options often come with lower interest rates and fewer fees compared to credit card transfers.
