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What is a money transfer credit card?
A money transfer credit card lets you move money from your credit card into your bank account. You can then use these funds to make a purchase or to pay off an existing debt. Note that you will usually be charged a transfer fee of up to 5% when you transfer the funds.
If you have a money transfer card that offers 0% interest, you won’t pay any interest on your credit card repayments for a number of months. The best deals currently last over a year.
After the promotional period ends, interest is charged on any remaining balance at the credit card’s standard rate. Approval for any credit card depends on your status. The representative APRs shown represent the interest rate offered to most successful applicants. Depending on your personal circumstances, the APR you’re offered may be higher, or you may not be offered credit at all. Fees and rates are subject to change without notice. It’s always wise to check the terms of any deal before you borrow.
Approval for any credit card depends on your status. The representative APRs shown represent the interest rate offered to most successful applicants. Depending on your personal circumstances, the APR you're offered may be higher, or you may not be offered credit at all. Fees and rates are subject to change without notice. It's always wise to check the terms of any deal before you borrow.
How do money transfer credit cards work?
Money transfer credit cards let you move money from your card directly to your bank account. The maximum amount you can transfer will usually be a percentage of your credit limit – typically 90% to 95%. The minimum is usually around £100.
Once you’ve compared lenders and found the best money transfer deal for you, submit your application and wait to receive your card. Once you’re up and running, log in to your account, choose “money transfer” or “transfer money to my bank account” and select the amount you want to transfer. You’ll then need to provide your bank account details so your transfer can be paid. If the card provider approves the transfer, the money can be in your account within 1 to 3 working days. After the transfer is complete, you make monthly repayments to your credit card provider.
If your card has a 0% introductory offer, you benefit from interest-free payments for a number of months 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 in
If you still have a balance outstanding at the end of the promotional period, it starts 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 ensures you make the necessary monthly payments 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 will likely be charged an initial fee when you ask for a money transfer. This is usually between 1% and 5% of your transfer amount. So if you were transferring £2,000 and your card charged 5%, you’d pay £100. This is usually added to your balance.
In many cases, it can still make sense to pay a high fee if it means a longer interest-free period. But if you can pay off your balance quicker, you might want to look for a card with a lower transfer fee and a shorter 0% period.
Money transfer vs Balance transfer
Confused by the difference between these 2 terms? A balance transfer involves bringing across an outstanding credit card debt from your old card 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.
Best practice when using a money transfer card
- When applying for a money transfer card, it’s important to work out what you will pay in transfer fees and calculate how much you need to pay off each month to have cleared the balance by the end of the 0% deal. For example, if you transferred £1,000 with a 5% fee, your total balance on the card would be £1,050. If your card offered 0% interest for 12 months, you’d need to pay off £87.50 a month to clear your debt before the interest-free offer ends.
- If you can’t afford to repay this amount each month, it’s crucial that you make at least the minimum monthly repayment to avoid late payment fees and risk hurting your credit score. Set up a direct debit to help you remember to do this each month. If you can’t clear your balance before the 0% deal ends, you’ll need to shift the remaining debt to a 0% balance transfer card (to avoid being charged interest) and pay another transfer fee.
- Also, be aware that to benefit from any 0% offer, you usually need to make your transfer within 60 to 90 days, depending on the provider, so be sure to check. After this time, any transfers would incur interest at the card’s standard rate.
- Finally, if you want to use your money transfer card for spending or balance transfers, you’ll need to check whether these transactions are also interest-free or whether you’ll be charged interest. However, it’s generally safer to use different cards for different purposes.
How to choose the best money transfer card for me
When you compare money transfer credit cards, be sure to consider the following:
- Length of 0% deal. If you need longer to repay your credit card balance, you’ll want to look for the longest 0% deal available. This is typically up to a year or more.
- Money transfer fee. Compare the transfer fee carefully, as fees can be up to 5% of the amount you transfer.
- Transfer time. Check how long you have to make your money transfer to qualify for the 0% offer. This could be 60 or 90 days.
- Other promotional offers. If you might use your credit card for balance transfers or purchases, check whether these are also interest-free for a set time.
Eligibility for a money transfer credit card
To get a money transfer credit card, you need to be at least 18 years old and a UK resident. You’ll also need a bank account to receive the funds. To qualify for the most competitive deals – those cards that offer the lengthiest 0% deals – you’ll need to have a good credit rating. If you don’t, you might be offered a shorter interest-free deal or turned away completely.
It’s sensible to use an eligibility checker before you apply for a credit card, as this will tell you which cards you’re most likely to get accepted for so you can apply with confidence. What’s more, because it uses a soft search, it won’t affect your credit rating.
Pros and cons of a money transfer credit card
- Easy to use. These cards are a fast and straightforward way of boosting your bank balance.
- Large payments. Enables you to pay off existing debt, make large purchases or make 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. Once the 0% deal ends, interest kicks in, so aim to clear your debt before this.
- Money transfer fee. The fee you pay is normally a percentage of the amount being transferred, making it more expensive 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.
Alternatives to a money transfer credit card
Some of the alternatives to a money transfer credit card include:
An overdraft can be a useful option for short-term borrowing, but it can also be expensive. A handful of providers offer interest-free overdrafts on their current accounts, but these tend to be for a limited time or a limited amount only. Otherwise, interest rates sit between 15% and 40%.
A personal loan
You can typically borrow a much larger sum with a personal loan than you can with a credit card. The most competitive interest rates tend to be on loan amounts of between £7,500 and £15,000, and you’ll need to repay this in fixed monthly instalments, making it easier to budget. You can typically borrow over a period of 1 to 7 years.
Common questions about money transfer credit cards
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