Can You Do a Bank Transfer With a Credit Card?

While credit cards are primarily designed for purchases, specific mechanisms and alternative methods allow funds to be moved from a credit card to a bank account. Understanding these options, along with their associated costs and implications, is important for anyone considering such a transaction.

Direct Credit Card to Bank Account Transfers

The most straightforward way to transfer money from a credit card to a bank account is through a “cash advance.” A cash advance is essentially a short-term loan provided by your credit card issuer, allowing you to borrow money against your credit limit. This differs from a standard purchase because you are receiving cash directly rather than buying goods or services.

You can typically obtain a cash advance in a few ways. One common method is withdrawing cash from an ATM using your credit card and a Personal Identification Number (PIN). Another option involves using convenience checks provided by your credit card issuer, which can be written out to yourself and deposited into your bank account.

Some credit card companies also allow in-person cash advances at a bank branch or direct transfers to your checking account through online banking or a mobile app. The credit card issuer treats these transactions distinctly from regular purchases.

Understanding Associated Costs and Fees

Cash advances, while convenient, come with several financial implications that make them a costly way to access funds. Credit card companies typically charge an upfront cash advance fee. This fee is often a percentage of the amount advanced, commonly ranging from 3% to 5%, or a flat fee, such as $10, whichever is greater. For example, a $500 cash advance with a 5% fee would incur a $25 charge.

Beyond the initial fee, cash advances are subject to significantly higher interest rates, known as the Annual Percentage Rate (APR), compared to standard purchases. This APR can be several percentage points higher, often in the range of 25% to 30% or more. A notable difference with cash advances is the absence of a grace period; interest begins to accrue immediately from the transaction date, unlike purchases which often allow a period before interest is charged. Additionally, if you obtain the cash advance from an ATM, you might incur separate ATM fees on top of the credit card issuer’s fees. These higher costs reflect the increased risk credit card issuers take when providing immediate cash.

Alternative Methods for Sending Money

While direct cash advances are one way to get money from a credit card into a bank account, other methods exist that achieve a similar outcome, albeit indirectly. Peer-to-peer (P2P) payment applications, such as PayPal or Venmo, allow users to send money to others. When funding these payments with a linked credit card, the P2P app typically charges a processing fee, often around 3% of the transaction amount. The recipient then receives the money in their linked bank account, effectively moving funds from your credit card to another person’s bank account through an intermediary.

Another alternative involves balance transfers that deposit funds directly into a bank account. Some credit card companies offer balance transfer checks or direct deposit options, primarily for consolidating debt onto a new card, often with a promotional Annual Percentage Rate (APR). While these are intended for debt management, they can place cash into your bank account. A balance transfer fee, typically ranging from 3% to 5% of the transferred amount, is usually charged for these transactions.

Third-party payment services also provide a means to move money from a credit card. These services facilitate payments for various purposes, such as rent or tuition, allowing you to use a credit card for the payment, which then reaches the recipient’s bank account. These platforms generally charge a processing fee, often between 2.5% and 3.5%, for using a credit card. This allows funds to flow from your credit card to a bank account without a traditional cash advance.