Transferring money from a credit card to a bank provides a mechanism for accessing cash quickly, managing short-term liquidity, or covering urgent expenses. According to a 2023 report by the Reserve Bank of India (RBI), approximately 12% of credit cardholders in India have used cash advance or fund transfer services in the past year, highlighting its growing utility.
Overview of Credit Card to Bank Transfer
Credit card to bank transfer involves the transfer of funds from a credit card account to a savings or current account. This kind of transaction, which is commonly classified as a cash advance, enables one to acquire access to bank funds immediately and bypasses the normal purchase route. The payment might be carried out online, through mobile services, automated teller machines (ATMs), or through third-party services with proper authorisation.
Methods of Transfer
Online Banking and Mobile Apps
Online banking systems provide an easy way to Transfer Money from Credit Card to Bank. The process of initiating the transfer will require the user to log in to his or her net banking portal, where he or she will be asked to select the concerned credit card, enter the amount and bank account details, and authenticate using authentication codes. It is reported that more than 75% of the fund transfers in 2023 made by credit cards in India are done using online banking because it is fast and convenient.
ATMs
The credit cardholders can also use the ATMs to get cash, and they can then deposit the cash in a bank account. Nevertheless, the transfer of funds through an ATM tends to face lower daily restrictions and higher charges as compared to online payment.
Third-Party Money Transfer Services
Money transfer services like Western Union and Paysend are offered by third-party firms that allow users to transfer money from a credit card to a bank account. These services are accessible online, through mobile applications, and at local agent locations.
In order to send money through these services:
- Give your credit card and the bank account of the recipient.
- State the amount of transfers and finalise the transaction.
- Note that money transfer services provided by third parties can add extra
charges to using a credit card, and the exchange rates may not be as favourable as when using other options.
Steps to transfer money from a credit card to a bank account
Once it has been confirmed that the credit card supports money transfers and the applicable charges are acceptable, the following steps can be used to complete the transfer:
- Gather required details: The bank account number and sort code must be available. The receiving bank account should be in the same name as the credit card account holder.
- Log in to online banking or the credit card app.
- Select the credit card from which the transfer is to be initiated and proceed to the money transfer option.
- Enter the transfer amount.
- Provide the bank account details for the receiving account.
- Review the transfer fees and associated charges.
- Verify all information and confirm the transaction.
If any difficulty is encountered during these steps, the credit card provider should be contacted. In some cases, the card may not support money transfers, or the available credit limit may be insufficient to complete the transaction.
Charges and Interest
The convenience of transferring money from a credit card comes with costs:
- Processing Fees: The fee is usually 2-3% of the transaction value, and the lowest minimum charges are ₹100 to ₹300.
- Interest Charges: Cash advances are charged interest accruing since the time of the transaction, as opposed to normal purchases, where they have a grace period.
- Taxes: GSTs can be imposed on transaction charges.
A lot of banks consider a transfer of money or making a withdrawal using a credit card (through a cash advance or otherwise) a cash advance. The cash advance fees in India are usually 2.5%-3% of the transferred amount (or a low charge such as ₹300- ₹500).
Transaction Limits
A credit card for bank remittances is restricted by various limits:
- Daily Limit: This is usually between ₹10,000 and 50,000 as per the type of card.
- Monthly Limits: There are also limits to the amount that can be transferred monthly, which are imposed by particular banks.
- Tiered Card limitations: Premium Cards have greater transfer limits compared to regular ones.
These limits are designed to manage credit exposure and mitigate risk for both cardholders and financial institutions.
Credit Card Money Transfers: Pros and Cons
Transfer Money from Credit Card to Bank account can give rapid access to cash or help with covering short-term bills. It is, however, associated with charges and repayments. The key pros and cons are outlined below.
| Pros | Cons |
| Provides a temporary solution for urgent cash needs, such as utility bills, rent, or medical emergencies. | Attracts high transfer fees, typically 2%–5% of the transferred amount, increasing the overall cost. |
| Some credit cards offer 0% interest money transfer promotions for 3–12 months, helping reduce interest burden if repaid in time. | Interest begins immediately if no promotional rate applies, often exceeding 30–42% APR. |
| Allows consolidation of multiple small debts into a single manageable balance when used strategically. | Missed or late payments lead to penalty rates (often 29%+), loss of promotional benefits, and added charges. |
Considerations When Transferring Money
Before transferring funds from your credit card to your bank account, consider the following:
- Fees and charges: Evaluate the fees of transferring, the interest rate and possible ATM fees of each method.
- Credit limit: It is important to remain within the credit limit to avoid over-limit charges.
- Interest-free periods: In case it is offered, use the interest-free periods to control the cost of borrowing. However, you must ensure to pay back within the given time period.
- Effects on credit score: When you are transferring funds regularly through your credit card to your bank account, it may increase your ratios on credit utilisation, which may have a negative effect on your credit score. High credit usage would indicate financial stress, and it can make you seem unsafe in the eyes of the lenders.
Conclusion
Transfer money from Credit Card to Bank is a convenient financial tool to use in immediate cash needs, especially in cases of emergency. Still, the costs, limits, and implications of possible credit scores are to be evaluated because of high charges and interest rates. The cardholders will be able to take advantage of credit card liquidity without losing financial control since a secure and authorised channel will ensure a safe and efficient transfer process.
DISCLAIMER: The information given in this blog is for educational purposes only. Any content of this blog is not investment advice.
