Can I Send Money With My Credit Card?

Using a credit card to send money is possible, but it comes with distinct considerations compared to typical credit card purchases. While convenient, money transfers often involve specific fees and interest structures, making them a more expensive option than other payment methods. Understanding these nuances is important for managing your finances effectively.

Direct Methods for Using Your Credit Card to Send Money

A direct method for accessing cash from your credit card is a cash advance. This allows you to borrow cash directly against your credit card’s available credit limit. You can obtain a cash advance by withdrawing money at an ATM using your credit card’s Personal Identification Number (PIN), visiting a bank or credit union to request funds from a teller, or utilizing convenience checks provided by your card issuer. Some issuers also permit phone requests, where funds are deposited directly into a linked bank account.

Interest on cash advances typically begins accruing immediately from the transaction date, unlike standard purchases that often have a grace period. The Annual Percentage Rate (APR) for cash advances is generally higher than for regular purchases. Your cash advance limit is usually a set percentage of your overall credit limit, not the entire amount, and can vary by card and issuer.

Sending Money Through Third-Party Services

Credit cards can also be used to send money indirectly through various third-party services, primarily peer-to-peer (P2P) payment applications and online money transfer services. Popular P2P apps such as PayPal, Venmo, and Cash App allow users to link a credit card to send funds. These services often impose a fee for transactions funded by a credit card, which is usually a percentage of the amount transferred. Some P2P services, like Zelle, do not support credit card transactions, requiring a linked bank account or debit card for transfers.

Beyond P2P apps, dedicated online money transfer services like Western Union and MoneyGram also accept credit cards for sending funds. These services facilitate transfers either online or in person, with various options for recipient pickup. When using these platforms, credit card transactions are frequently categorized as cash advances by the card issuer, leading to additional fees and higher interest rates. Fees for these services can fluctuate based on factors like the payment method, destination country, and transfer speed.

Key Considerations Before Sending Money with a Credit Card

Before using a credit card to send money, it is important to understand the associated costs and potential impacts on your financial standing. Cash advance fees from your credit card issuer typically range from 3% to 5% of the transaction amount or a flat minimum fee, such as $10, whichever is greater. Additionally, if you use an ATM for a cash advance, you might incur separate ATM operator fees. For third-party services, P2P apps commonly charge around 3% for credit card-funded transactions, while money transfer services have variable fees that are generally higher for credit card use.

Interest rates are another significant factor. Cash advances usually carry a higher Annual Percentage Rate (APR) than regular purchases, often ranging from 17.99% to 29.99% or higher. Unlike purchases, interest on cash advances begins accruing immediately from the transaction date, without any grace period. While P2P credit card transactions are treated as purchases by your card issuer, subject to standard interest if the balance is not paid in full by the due date, the service fee charged by the app is immediate.

Using a credit card to send money can also affect your credit score, primarily through increased credit utilization. If a cash advance or a large transaction pushes your credit utilization ratio above 30% of your available credit, it can negatively impact your score. The higher costs associated with these transactions can make it more challenging to pay off balances, potentially leading to missed payments, which further harms your credit score.

Credit card companies may also apply minimum payments to lower-interest balances first, allowing the high-interest cash advance balance to accrue more interest. Moreover, both credit card companies and third-party services impose daily or per-transaction limits on the amount of money you can send.