How to transfer money from a credit card to cover costs

Australia By Cecilia Hendrix April 5, 2021

Unexpected circumstances can leave hard-working Australians in a bind, struggling for extra funds. If an emergency occurs or your paycheck doesn’t arrive fast enough to pay your bills, knowing how to transfer money from a credit card to a bank account or debit card can assist when you or your loved ones need it most.

There are several ways you can turn credit into cash, with some solutions taking effect immediately or in a few banking days. But how do you know which solution is right for you? And what other details should you know before you transfer money from a credit card? We discuss three options here.

How to transfer money from a credit card to a bank account or debit card

1. Cash advance

One of the easiest ways to transfer money from a credit card is through a cash advance, which acts similarly to a personal loan. With a cash advance, you can “borrow” money from your credit card and use the funds to make a purchase. Keep in mind that cash advances accrue interest right away, so make sure you can pay back the loan on time.

There are a few ways you can get a cash advance, including ATMs, in person, or via a convenience cheque. Most banks will allow you to take out a cash advance from an ATM, branch, or at a loan agency like CashnGo Loans so long as your credit card has a PIN. Some banks will also allow you to take out a cash advance in person and deposit the funds directly into your bank account. This is a convenient option if you have a local branch nearby.

Convenience cheques are another type of cash advance and are a good option for those looking to transfer money from a credit card to a bank account. Convenience cheques function similarly to traditional cheques, but rather than the money coming from your bank account, the money comes from your line of credit. Your credit card issuer can send you a convenience cheque that can then be deposited into your bank account and used to cover expenses.

2. Peer-to-peer (P2P) apps

P2P apps like PayPal, Cash App, and Venmo allow you to send money to your receiver and pay with your credit card. In return, your receiver can send money to your bank account. Different P2P apps have different requirements for sending, as well as different fees, so we recommend using an app that you’re familiar with.

Money transfer services

You can use a money transfer service like Western Union to make a domestic or overseas money transfer from a credit card. With Western Union, in particular, you can send money online, with the Western Union app, or in person at an agent location. Not all money transfer services are created equal so you will want to do your research before you send money to ensure there are no hidden fees.

What to be aware of when transferring money from a credit card

Whether you are paying off an old card balance or aiding someone in need, transferring money from a credit card to a bank account or debit card can help when you are in a bind,. No matter your reason for transferring money, you may be wondering if it’s a good idea to transfer money from a credit card to a bank account or credit card. Put simply, transferring money from a credit card isn’t always an advisable option. But when it’s the only option, there are ways you can protect your credit rating and save yourself from hefty fees. Here are three things to consider.

1. Credit

The three major credit bureaus in Australia, illion, Experian, and Equifax, have their own rating systems. The closer to 1,200 you get, the better your rating will be. Requesting too many cash advances or loans, borrowing from yourself for quick cash, or filing for bankruptcy can decrease this score and accrue debt. Build good credit by reducing the frequency of transfers from credit to debit and always making payments on time.

2. Fees

Fees fluctuate depending on the way you choose to transfer money from credit cards, but most of these alternatives will charge extra fees. Using money from your savings or borrowing from a close friend can prevent unnecessary stress and overwhelming debt.

3. Interest

Situations arise which require urgent fund relocation. Interest rates can be high for transfers from a credit card to a bank account or a debit card, so try to avoid paying more by investing in lower interest loans. This could be seeking a home equity line or switching to another credit card that boasts a 0% offer in the beginning.

Sending money? Western Union can help

Taking care of those we love isn’t always easy but having the ability to help with essential funds can make all the difference. Credit to debit transfers can come with confusing steps and high fees, so stick to the names and banks you trust and never send money to a stranger. Companies like Western Union are great for sending money to locations all over the world even if your recipient doesn’t have a home internet connection. Create an account to make a transfer from your credit card and see how easy it is to move money with Western Union.