Can You Transfer Money From a Credit Card?

Credit cards are primarily used for purchases, but they can also access funds or transfer outstanding balances. These transactions differ significantly from typical credit card purchases in their mechanics and financial implications. Understanding these methods—cash advances, balance transfers, and third-party payment services—is important for using a credit card beyond standard retail transactions. Each approach involves distinct processes and carries its own set of considerations for the cardholder.

Accessing Funds Through Your Credit Card

A primary method for accessing funds from a credit card is a cash advance, which involves borrowing cash against your available credit limit. Cardholders can get a cash advance by withdrawing money at an ATM using their credit card PIN, similar to a debit card transaction. Another option is to visit a bank branch and request a cash advance from a teller, presenting the credit card and identification.

Some credit card issuers also provide convenience checks. These function like personal checks but draw funds from the credit card’s cash advance limit and are treated as cash advances. Card issuers may also allow cash advances to be requested over the phone or online, with funds deposited directly into a linked bank account.

A balance transfer enables moving existing debt from one or more credit cards or loans to a new credit card account. This process often involves applying for a new credit card designed for balance transfers, which may offer promotional terms. Once approved, the cardholder provides details of the old credit card account, such as the issuer name, account number, and the amount to be transferred, to the new card issuer. The new card issuer typically pays off the old account directly, consolidating the debt onto the new card. This can simplify debt management by combining multiple payments into a single monthly obligation.

Credit cards can also be used through third-party payment services, allowing users to send money digitally. Platforms like Venmo, PayPal, and Cash App enable users to link credit cards as a funding source for transactions. To initiate a payment, a user selects their credit card within the app and specifies the recipient and amount. The service processes the payment, drawing funds from the credit card and transferring them to the designated recipient. While these services facilitate quick money transfers, they typically differentiate between funding sources.

Understanding Credit Card Transfer Costs

Accessing funds through a credit card involves costs that differ from standard purchase transactions. For cash advances, a transaction fee is typically charged immediately when the advance is taken. This fee is commonly a percentage of the amount withdrawn, often 3% to 5%, or a flat minimum fee, such as $10, whichever is greater. Interest on cash advances begins accruing immediately from the transaction date, without the grace period usually applied to purchases. The annual percentage rate (APR) for cash advances is generally higher than the APR for regular credit card purchases, often 20% to 30% or more.

Balance transfers also incur costs, primarily a balance transfer fee. This fee is typically a percentage of the transferred amount, commonly 3% to 5%, with a minimum of $5 or $10. This fee is added to the transferred balance on the new card. Many balance transfer credit cards offer an introductory 0% or low APR for a promotional period, which can be six to 21 months or longer. Once this promotional period expires, any remaining balance will be subject to a standard, often higher, APR, as outlined in the cardholder agreement.

When using third-party payment services to send money via a credit card, a percentage-based fee is frequently applied. For instance, some services may charge around 2.9% for credit card payments. This fee is imposed by the payment service provider for facilitating the transaction using a credit card. While some services might offer free transfers from bank accounts, using a credit card typically incurs a charge due to processing costs.

Transaction Limits and Reporting

All credit card transactions, including cash advances and balance transfers, are constrained by the cardholder’s overall credit limit. Credit card issuers often impose a separate, lower sub-limit for cash advances. This cash advance limit is typically a percentage of the overall credit limit and is usually less than the total available credit for purchases.

Beyond issuer-imposed limits, external factors can also affect transaction amounts. ATMs, for instance, often have their own daily withdrawal limits, which can be $300 to $1,000, irrespective of the card’s cash advance limit. Similarly, third-party payment services may have their own daily or per-transaction limits for sending funds. These limits are in place for security and to manage liquidity.

Cash advances and balance transfers are recorded on monthly credit card statements. These transactions are typically categorized separately from regular purchases, allowing cardholders to distinguish between different types of credit usage. While the transaction itself may not directly impact a credit score, it can indirectly affect it by increasing the credit utilization ratio. Credit utilization reflects the amount of credit used relative to the total available credit, and a high ratio can influence credit scores.