What is a money transfer credit card?
A money transfer credit card is different to a standard credit card in that it lets you transfer money into your bank account. There’s often a money transfer fee (this varies depending on the provider), but many offer 0% interest on the outstanding balance for an agreed period.
Once you’ve transferred the money into your account, you can use it as you wish – to reduce an overdraft or debt, as well as cover any other expenses or make a purchase.
A money transfer credit card is a good option if you need cash but don’t want to take out a loan.
Frequently asked questions
What’s the difference between a money transfer card and a balance transfer card?
A money transfer card allows you to transfer cash into your current account, while a balance transfer card only allows you to transfer debts from one credit card to another.
How can they potentially save me money?
Once the money is in your bank account, a money transfer card can help you to pay off debt. If you’re being charged interest on a debt, this could help you to cut your interest bill.
For example, if you have a debt of £2,000 and the APR on that debt is 15%, this will cost £25 a month in addition to what you already owe (or £300 a year).
However, you could consider a money transfer card to pay off this debt. While you might need to pay a one-off fee of say 4%, which will cost you £80 in this example, you could pay off the outstanding balance on the money transfer card with no additional interest. You’d need to make sure you pay off the balance before the 0% period ends, though, and make the minimum payment each month.
What is APR?
The annual percentage rate (APR) represents the yearly rate of interest you pay for borrowing money, via credit cards, loans or mortgages. Generally speaking, a low APR indicates lower interest rates and lower associated fees.
When should I use a money transfer card?
You could use a money transfer credit card to make a cash-only purchase or pay off any existing debt, such as an overdraft or credit card, to help save on interest payments.
For example, if you’re accepted for a £3,000 money transfer card, you could potentially use this money to pay £1,000 off an existing loan, £1,000 of any overdraft you might have and also make a high-value purchase.
As with all credit cards, you should apply just for one and only use it if you can financially manage the debt, ideally clearing the outstanding balance prior to the end of any introductory offer.
Should I get a personal loan or a money transfer card?
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 what you owe at any time (as opposed to fixed monthly loan payments with potential charges for overpayments) could be a good option for you.
However, you need to take into account that if you don't clear what you owe during that 0% period, you’re likely to end up paying a much higher APR than many personal loan rates.
What things will I need to watch out for?
Although money transfer cards may look like a suitable option for you, there are a few things to watch out for:
- The transfer fee is typically 4% of the amount you transfer, so check the actual percentage 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 all those that apply receive the headline deal, so it will depend on your personal circumstances.
How do I compare?
That’s where we can help. Our easy-to-use comparison service can help you choose a money transfer credit card that's right for you.