How Can I Transfer Funds from a Credit Card to a Bank Account?

How Can I Transfer Funds from a Credit Card to a Bank Account?

November 20, 2020         Written By Bill Hardekopf

Need money in your bank account and you just don’t have any available? If so, your credit card might be of service. It is possible to move money between your credit card and bank account, but you need to be aware of the fees involved. Read on to learn how to transfer funds from a credit card to a bank account.

Ways to Transfer Funds from a Credit Card to a Bank Account

It is possible to transfer funds from a credit card to a bank account, but the process is not always convenient. You need to be mindful of your card’s features, fees and interest rates before pursuing this option. Here are some different ways to complete a credit card fund transfer:

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  • Cash advance from an ATM: The most common way to transfer money from a credit card to a bank account is to get a cash advance from the ATM. Not all credit cards offer cash advances, and most that do charge high fees for the transaction. Nevertheless, you have the option to pull money from the ATM and then deposit it as cash to your checking or savings account.
  • Direct transfer: A few select credit cards now offer direct transfers online. You can transfer money from your credit card to your bank account on your mobile app or through the card’s website. This is not a common option for credit cards. If your card provides this option, be aware of the fees associated with direct transfers.
  • Cash advance in person: If your credit card is issued by a bank with physical branches, you might be able to get a cash advance in person. This transaction will still carry fees, just like it would from an ATM. Withdraw the cash and then deposit accordingly.
  • Convenience checks from your credit card: Some credit cards provide convenience checks. You will receive a physical check in the mail that you can then deposit into your bank account. This is still considered a cash advance and will be charged fees/interest accordingly.

In most cases, you cannot transfer funds from a credit card to a bank in one swift transaction. You need to first withdraw funds from the card and then deposit them into your bank account. This process comes with many fees, so it’s important to avoid cash advances unless they’re absolutely necessary.

Credit Cards for Cash Advances

Taking out a cash advance is far from ideal, but sometimes, it’s the only option. Not all credit cards support cash advances, and some have higher fees than others. Here is a list of some credit cards that offer cash advances:

Destiny Mastercard®

The Destiny Mastercard® offers a $0 cash advance fee for the first year – a rare find among credit cards! After that, the fee is $5 or 5% of the transaction, whichever is greater. The cash advance APR is 24.9%, and the annual fee is $59-$99.

Reflex Mastercard® Credit Card

The Reflex Mastercard® Credit Card comes with free monthly credit scores, along with $0 fraud liability coverage. The cash advance fee for this card is $5 or 5%, whichever is greater, and the cash advance APR is extremely high.

First Access Visa® Credit Card

The First Access Visa® Credit Card has an easy and secure online application. You will be charged a program fee but only if you are approved for the card. Once approved, you will have access to a certain credit limit, and your timely payments will be reported to all three credit bureaus. You may be able to receive your card more quickly with optional Expedited Processing (additional fee applies).

Why You Shouldn’t Transfer Funds from a Credit Card to a Bank

Before you consider sending money from your credit card to your bank account, you need to evaluate the fees involved. With regular credit card purchases, you have a grace period before you accrue interest. Pay off the balance within the grace period, and you don’t have to pay any interest at all.

Cash advances start accruing interest right away. There is no grace period to pay back the balance. You will also pay a cash advance fee for the transaction, which is usually 5%. That $100 you pulled out instantly becomes $105 in debt, with interest charges racking up every day. If the ATM you used charges a separate ATM fee, that’s even more money you’ll have to pay back.

Something else to keep in mind is that you may not be able to withdraw the amount of money you need. Some credit cards and ATMs set withdrawal limits, either per transaction or per day. If you need $400 and the ATM only lets you pull out $200 at a time, you’ll have to do two separate transactions, resulting in two sets of fees. Most ATMs only allow you to withdraw multiples of $20, so if you need a dollar amount that falls in between, you’ll have to withdraw more than you actually need.

If you struggle with debt management, don’t look at cash advances as an opportunity for “fast cash.” This is a high interest loan that can quickly snowball into significant debt. Only take out a cash advance in an emergency. There are plenty of alternatives to consider before you take this step.

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Alternative Solutions for Emergency Funds

Now that you know how costly cash advances can be, consider alternate ways to get money for your bank account. The option you use will depend on your reason for needing money in the first place. Her are some potential solutions:

  • Temporarily overdraft your bank account, if possible. Many banks now require you to opt-in to overdraft your account, which means you will have to unlock that option for your bank account. If you can overdraft, you may be able to temporarily charge more to your debit card than what you have available in the account. You’ll have to pay a fee for every overdraft transaction, but some banks will waive the first fee for you.
  • Get a personal loan or payday loan. If you can get a personal loan through your bank or credit union, the interest will most likely be less than your credit card cash advance APR. A payday loan will be more expensive to maintain, but it is an option if you have past credit challenges. Payday lenders tend to be lenient about credit as long as you have sufficient proof of income.
  • Pursue an installment loan for the purchase. Some credit card issuers allow installment plans for large purchases. You will still charge your credit card for the transaction, but you’ll create a separate payment arrangement for that purchase. You could also inquire about installment plans through the company you’re buying the product from.
  • Ask for a payment extension. If you need money in your bank account to pay a bill or make a loan payment, talk to the billing company about a payment extension. See if you can put off the payment until your next payday, or if you can pay a portion of it now and a portion of it later. Even if you have to pay a fee for this option, it will likely be lower than the cash advance fee on your credit card.
  • Postpone the transaction altogether. Is it possible to delay the transaction until you have the funds in your bank account? You might have to make a few sacrifices until then, but at least you won’t have large fees to pay.
  • Transfer funds from another bank account. Move money from your savings into your checking account to cover what you need. Then replace the money in your savings account the next time you get paid. If you make an internal transfer within the bank, you most likely won’t have a fee at all.

Could a Cash Advance Hurt My Credit Score?

How a cash advance impacts your credit score will depend on how you manage your money. If you repay the cash advance right away, the payment will be reported on your credit report just like any other. If you carry a balance into the next month, that may increase your credit utilization rate, which makes up 30% of your credit score. The lower your utilization rate is, the better your score is. If the cash advance causes you to max out your credit card, your credit score may drop until you pay that off.

Also keep in mind that making a late payment on your cash advance or your credit card as a whole could reduce your credit score. Payment history accounts for 35% of your FICO score. If you have no choice but to take out a cash advance, try to pay it off as quickly as possible. Make at least your minimum credit card payment on time, and pay as much additional money toward the principle as you can. This will protect your credit score through this hurdle.

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The information contained within this article was accurate as of November 20, 2020. For up-to-date information on any of the terms, cards or offers mentioned above, visit the issuer's website. Many of the offers on this article are from our affiliate partners, and LowCards.com may be compensated if you take action with any of our affiliate partners.

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bill-hardekopf

About Bill Hardekopf

Bill Hardekopf is the CEO of LowCards.com and covers the credit card industry from all perspectives. Bill has been involved with personal finance for over 15 years. He is a frequent contributor to Forbes, The Street and The Christian Science Monitor.