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Compare the best money transfer credit cards
Credit cards that allow you to transfer money from your credit card to your bank account can be very useful. If you need to make large payments, or if you want to pay off an overdraft or other debts, a 0% money transfer card could be a low-cost way to do it.
Money transfer credit cards offer a very low or 0% interest rate on money you transfer from your credit card to your current account. The low or 0% interest period can be anything from 6 months to 36 months – sometimes even longer. After the promotional period is up, interest will be charged on the amount transferred at the credit card’s standard rate.
Money transfer vs. Balance transferConfused by the difference between these two terms? A balance transfer involves bringing across an outstanding credit card debt from your old card (or cards) to a new card. A money transfer (in this context) simply involves making an online transfer of funds from your credit card to a bank account of your choosing.
Compare money transfer credit cards
How do money transfer credit cards work?
Once you’ve compared lenders and found the best low or 0% interest money transfer deal for you, submit your application and wait to receive your card. Once you’re up and running, you’ll be able to log in to your account, choose “money transfer” or “transfer money to my bank account” and then select the amount that you would like to transfer. If the card provider approves the transfer, the money can be in your account within 1 to 3 working days.
You will usually be given the chance to transfer the difference between your current credit card balance and your limit, minus any fees that apply.
You will enjoy low or no interest on the amount of the money transfer for the stated time period, as long as you make your minimum monthly repayments on time. If you don’t make your minimum repayments, you could lose your promotional rate and have to pay interest much sooner.
Don't get stung when the higher rates kick inIf you still have a balance outstanding at the end of the promotional period, it will start to accrue interest from this point. Always aim to pay off the balance within the low or 0% interest period.
One good way to do this is to set a monthly direct debit payment for the amount borrowed, divided by the number of months of the deal. This will ensure you make the necessary monthly payments in order to clear the debt before interest starts accruing.
What about the fees?
Although you’ll pay little or no interest on the amount(s) transferred, you are likely to be be charged an initial fee when you ask for a money transfer. This is usually between 1% and 5% of the amount you are transferring.
If you are transferring several thousand pounds, this initial charge can get uncomfortably high. In this situation, you might be better off choosing a low interest money transfer deal without transfer fees, rather than a 0% interest transfer deal with transfer fees.
Whether this works out cheaper will depend on the date you think you will be able to pay off the debt in full. If you think you can pay it all off quickly, then it is often smarter to pay a low rate of interest on the balance, but avoid the transfer fee. If you think it’s going to take a long time to pay of the balance, then it is often smarter to pay a transfer fee but avoid paying interest.
Remember that some cards may also have an annual fee attached.
Pros and cons of a money transfer credit card
- Easy. These cards are a fast and straightforward way of boosting your bank balance.
- Large payments. Enables you to pay for things that you can’t pay for with a credit card, such as large payments to other individuals.
- Low cost. Usually a cheaper alternative to personal loans and overdrafts.
- Cash payments. If you need cash, you can transfer money to your current account and withdraw it as cash, avoiding any nasty cash advance rates and fees.
- High interest after promotional period ends. Aim to pay off the balance within the promotional period to avoid incurring painful interest.
- Money transfer fee. The fee you pay is normally a percentage of the amount being transferred, making it significant for larger transfers.
- No purchase protection. If you transfer money from the card, and then use that money to make purchases, you won’t benefit from protection under Section 75 of the Consumer Credit Act 1974.
Do your sums
- With money transfer cards, it is important to calculate what you will pay in both fees and interest over the promotional period and compare this with other forms of borrowing. For instance, you may be able to get a personal loan that works out cheaper over the period, particularly if the initial fee is high.
- You should also make sure you can afford the monthly repayments you must make to clear the balance within the time period.
Common questions about money transfer credit cards
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