Money transfer credit cards

A money transfer card allows you to transfer borrowed cash into your current account, while a balance transfer card only allows you to transfer debts from one credit card to another.

Balance transfer cards can be useful because you can move debt from one credit card that’s charging you a high interest rate, to a lower or even 0% interest credit card. This makes it useful for debt consolidation, creating just one pot of debt that could be easier and cheaper to manage. Meanwhile, a money transfer card is simply used to transfer money from a card to your bank, in order to pay off a debt like an overdraft.

As with all types of borrowing, it’s important to think about how much you want to transfer and have a plan in place for paying it back. This will help you find a card with an interest-free repayment period that suits your needs.

Also, be mindful of the transfer fee. You’ll need to factor this into your repayment plan so you don’t overstretch yourself.

Finally, you should always be careful when taking on any form of debt. Be aware of any limits and added charges, as well as the terms and conditions. You should also have a plan ready to pay off the amount you’ll owe, a target of when to be fully repaid.

A money transfer credit card is a credit product, which means you’ll need to face a credit check when applying, which will leave a mark on your credit history, and, depending on whether you’re accepted or not, could impact your credit score.

If you use your card effectively, meeting all of your repayments and staying within your credit limits, you could see your credit rating improve. Although, if you fail to do this, it could just as easily get worse. So, as always, be careful when using any type of credit product.

A money transfer credit card can help you with debt. If you’re struggling with a high-interest overdraft, you can transfer money using your card to your bank account and cover the amount you owe.

Just remember that the debt then lies on the card, and so you’ll still have to pay off what you owe. However, if you can keep within your card’s limits, and keep up with your minimum monthly repayments, you could benefit from a 0% interest rate, which can help you manage your debt more easily.

You could use a money transfer credit card to withdraw from an ATM, but that’s not what they’re really for. You could also transfer money from your card to your account, before withdrawing it using your debit card, but both of these will incur extra charges. If you’re looking for a credit card that can help you access cash, you should consider a specific cash advance credit card.

Once the money is in your bank account, a money transfer card can help you pay off debt by saving you interest, so you can make a bigger dent in the actual sum borrowed.

Using a simple example, if you have a debt of £2,000 and the APR on that debt is 15%, this will cost £25 a month (or £300 a year) in addition to what you already owe.

With a money transfer card, however, while you might pay a one-off fee of, say, 4% – £80 on a loan of £2,000 – you could pay off the outstanding balance with no additional interest. But you’d need to make sure you can pay off the balance before the 0% period ends, and make at least the minimum payment each month.

The annual percentage rate (APR) represents the yearly rate of interest you pay for borrowing money, via credit cards or loans. Generally speaking, a low APR indicates lower interest rates and lower associated fees.

The time it takes for money to transfer to your account after you’ve been accepted for a card will depend on your provider. Some lenders offer instant transfers, while you may have to wait a few days with others.

A money transfer card could be cheaper than taking out a personal loan because the transfer fee, combined with a 0% interest free period, could mean you pay back less interest overall.

Also, the flexibility of being able to pay back the entire amount at any time (as opposed to fixed monthly loan payments with potential charges for overpayment) could be a good option for you.

However, you need to take into account that if you don't clear what you owe during the 0% period, you’re likely to end up paying a much higher APR than many personal loan rates.

If you’re considering a money transfer card, there’s a few things to watch out for:

• The money transfer fee is around 4% of the amount you transfer, so check the actual percentage on the card you’re considering and take this cost into account when comparing.
• If you withdraw the cash instead of transferring it straight to your account, you might be charged extra for making the transaction.
• You may not always get the headline deal, even if you’re accepted. Just over half (51%) of those that apply receive the headline deal, depending on their circumstances.

It depends on your situation. If you need a short-term cash injection, money transfer credit cards can be a good way to borrow cash quickly. However, that doesn’t mean they’re the best way to borrow money. 

You’ll need a good credit score to qualify for a 0% money transfer credit card, which means not everyone can truly benefit from them, while any 0% interest rate will have an expiry date. Once that rate expires, it’ll rise significantly, which could make it a very expensive way to borrow cash.

Money transfer credit card charges are based on a percentage of the amount you’re transferring. Interest rates vary, but you can expect to pay anywhere up to about 5% of the amount transferred. 

Look out for any introductory rates, and make a note of when they expire to avoid an expensive surprise. Your interest rate may also vary, depending on your credit score, with the best money transfer credit card rates typically reserved for people with higher credit scores.