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. After that period ends, interest will be charged on any outstanding debt.
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.
Unfortunately, due to the outbreak of coronavirus (COVID-19), some providers have decided to temporarily stop offering credit cards through Compare the Market. As a result, we'll only be able to show you credit cards from providers still available, meaning you may see a reduced number of cards on our panel.
We understand that the outbreak of coronavirus (COVID-19) has caused financial difficulty for some of you. If you have a credit card and you’re worried about making repayments due to coronavirus, we’re here to help you understand the options available.
How do money transfer credit cards work?
A money transfer credit card is a good option if you need cash but don’t want to take out a loan. But, like any other credit card, you’ll first need your application to be approved. You usually need to have a good credit score to be eligible for a money transfer credit card.
A transfer fee of around 1% to 4% will be added to your repayment, so remember to factor this into your calculations before deciding to transfer.
Look for a money transfer card with an extended interest-free period. This means you won’t have to pay any interest on your repayments, so long as you pay the money back in full within this time period. If you don’t pay it back before this period ends, you’ll be charged interest on what you owe.
Moving money between your money transfer credit card and your current account can be a useful way of managing short-term debts. However, you should always have a plan of how to repay the money you borrow, before you decide to transfer.
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 borrowed cash into your current account, while a balance transfer card only allows you to transfer debts from one credit card to another.
Who can get a money transfer credit card?
Not everyone is eligible for a transfer credit card. Lenders will want to be sure that you have a good credit rating and be able to affordably pay back what you transfer.
Use our credit card eligibility check to find out if it’s worth applying for a transfer credit card.
What do I need to think about when I get a money transfer credit card?
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.
How can a money transfer card potentially save me money?
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.
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.
What can I use a money transfer card for?
You could use a money transfer credit card to make a cash-only purchase or pay off an existing debt – for example, an overdraft or credit card – to 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 off £1,000 from an existing loan, £1,000 of any overdraft you might have and also make a high-value cash purchase.
As with all credit cards, you should apply for one only if you can financially manage the debt – ideally clearing the outstanding balance before the end of the interest-free period. Also avoid making multiple applications for cards as this can damage your credit rating if you’re rejected. You can find out what cards you’re likely to be accepted for before you apply by using our credit card eligibility check.
How long do money transfers take?
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.
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 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.
What will I need to watch out for?
If you’re considering a money transfer card, there’s a few things to watch out for:
- The transfer fee is typically 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. Up to half (51%) of those that apply receive the headline deal, depending on their circumstances.
Money product expert
What our expert says...
"Used sensibly, money transfer cards can be a useful way of avoiding paying interest on overdrafts or loans attached to your bank account. However, they can also lead to charges if you fail to pay back the money within the interest-free period. Make sure you only transfer an amount you know you can pay back."