Can I Transfer Money from Credit Card to Bank Account?
Many people have found themselves in a position where they may need cash, but their bank account balance is running low; however, they have a healthy credit card limit and are wondering if they can transfer money from their credit card to their bank account. The good news is, Yes, it is possible to transfer money from your credit card to your bank account, but there are some eligibility criteria, fees, and high-interest rates that come with it. In this article, we will explore how to transfer funds from a credit card to a bank account, the pros and cons of doing so, and some alternatives to consider.
A guide to transferring money from your credit card to your bank account
Definition of credit card transfer
A credit card transfer is the process of transferring money from your credit card balance to your bank account. The fund transfer allows the user to use their credit limit as a source of instant cash to maintain their financial liquidity. The amount transferred is considered a cash advance, which is different from a purchase made using a credit card.
Eligibility criteria for credit card to bank account transfer
The bank imposes different eligibility criteria for credit cardholders who want to transfer money from their credit card to their bank account. The most common eligibility requirements include a minimum credit card limit, a minimum age of 21 years or older, and a valid net banking account. The cardholder must also not have any pending dues or balance in his/her account. Different banks have different rules and regulations about the eligibility criteria.
Different ways to Transfer Money from Credit Card to Bank Account
There are various methods available for transferring money from a credit card to a bank account. Let’s look at some of the ways in detail:
1. Bank Transfer using NEFT/RTGS/IMPS
One of the most convenient, fast, and easiest ways to transfer money from a credit card to a bank account is through a bank transfer using NEFT (National Electronic Funds Transfer)/ RTGS (Real-Time Gross Settlement)/ IMPS (Immediate Payment Service). This method typically involves linking your credit card to your bank account. Once you have done that, go to the main menu, select the “Transfer Funds” option and complete the transaction by filling in the required information, such as the amount of the transaction and the beneficiary’s bank account details.
2. Cash Advance using cheques or ATMs
The cardholder can withdraw cash from their credit card limit using cheques, cardless cash withdrawal, and ATMs. A cardless cash withdrawal also referred to as Instant Money Transfer (IMT), is a convenient way to withdraw money securely when you need it, without having to wait in a queue. You need to log in to your bank account and fill in the required details to complete the transaction.
3. Online Payment Gateway
Another way to transfer money from a credit card to a bank account is by using an online payment gateway. This service allows users to transfer money from their credit card to a bank account that is registered with the payment gateway vendor. Some popular payment gateway vendors are PayPal, Paytm, Mobikwik, and Google Wallet.
Why you should avoid transferring money from your credit card to your bank account
High-interest rates
The interest rate charged on a cash advance from a credit card is typically higher than the interest rate for regular credit card purchases. The interest rate can be as high as 33% p.a. or more. Therefore, transferring money from your credit card to your bank account is not a cost-effective option and should be avoided unless it’s an emergency.
Additional fees on cash advance
The bank may impose additional fees, such as processing fees, transaction fees, or ATM withdrawal charges that could add up to the cost of the transfer. Therefore, make sure you read the terms and conditions before initiating the transfer.
The negative impact on your credit score
A credit card to bank account transfer is not a good option for people who are worried about their credit score. Every cash advance you make on your credit card is recorded in your credit history and can negatively affect your credit score. It is best to avoid frequent credit card transfers as it can decrease your creditworthiness in the eyes of creditors and lenders.
The pros and cons of transferring money from your credit card to your bank account
Advantages of credit card transfer
The advantages of using a credit card transfer include quick access to cash, hassle-free processing, and easy repayment options. It’s a convenient option when you need cash and don’t have any other alternatives.
Disadvantages of credit card transfer
The disadvantages of using a credit card transfer include high-interest rates, limited amount of cash advance, additional charges on cash advance, negative impact on credit score, and potential debt traps. People should avoid credit card transfers unless it’s an emergency.
A step-by-step guide to transferring money from your credit card to your bank account online
Choosing the right platform
Choose the appropriate payment gateway vendor or banking app that supports credit card to bank account transfers. Some examples include PayPal, Paytm, Mobikwik, and Google Wallet. Go to the app store or play store and download the app.
Setting up the transfer
Sign up for the app using your email or phone number, and enter all the required details such as your name, address, PAN number, and others. Add your bank account details, enter the amount you wish to transfer, and choose the credit card as your payment method.
Verifying the details
Before initiating the transaction, make sure you double-check all the details and ensure you have entered the right amount, beneficiary’s account details, and credit card details.
Initiating the transfer
Click on the submit button located at the bottom of the screen to initiate the transaction. The bank will process the transaction within a few minutes or a few hours, depending on the bank.
Checking the balance
Once the transaction is processed, check for the transferred amount in your bank account. If you don’t receive the amount within the specified time, contact the customer care of your bank for assistance.
Alternatives to transferring money from your credit card to your bank account
Using a debit card for purchase
Using a debit card for purchase is an excellent alternative to a credit card transfer. It gives instant access to funds in your bank account. The best part is there are no interest rates or charges involved. You can only buy based on the funds available in your bank account.
Bank transfer using NEFT/RTGS/IMPS
As mentioned earlier, you can transfer money from your credit card to your bank account using NEFT/ RTGS/ IMPS. This method avoids high-interest rates charged on credit card transfers. It’s faster and more convenient, and there are no additional fees involved when transferring money from a card to a bank account.
Cash advance using cheques or ATMs
Cash advance using cheques or ATMs is another option; however, it comes with additional fees. Most of the banks charge a cash advance fee for withdrawals made using a credit card. Therefore, you should use this option only when you have exhausted all other options.
Conclusion
Summary of the article
To sum up, transferring money from your credit card to your bank account is possible, but it comes at a high cost. High-interest rates, additional fees, and negative effects on credit scores make credit card transfer an unfavorable option. Therefore, people should avoid transferring money from credit cards unless it’s an emergency.
Recommendation to readers
Review the advantages and disadvantages before transferring money from your credit card to your bank account. Use a credit card transfer as an option only when you have no other alternatives. Try using debit cards to avoid interest rates and additional fees from bank transfers.
Final thoughts
The great thing about living in the digital era is that we have multiple options to access cash and manage our finances. However, we must understand the terms and conditions before engaging in any financial transactions. Remember, if you can’t afford to pay back the credit amount within the stipulated time, don’t take a cash advance from your credit card. It’s always best to follow the golden rule of financial management – spend less than you earn.
