How Can I Send Money From a Credit Card?

Sending money from a credit card involves accessing a portion of your credit line in a cash-like form rather than making a direct purchase. While credit cards are primarily designed for typical transactions, specific methods allow cardholders to obtain cash or transfer funds using their credit card account. Understanding these mechanisms and their associated considerations is important for anyone looking to utilize their credit card in this manner.

Common Methods to Send Money from a Credit Card

One common method for obtaining cash from a credit card is a cash advance, which allows you to borrow money directly against your credit card’s available credit limit. This can be done in several ways.

You can obtain a cash advance at an automated teller machine (ATM) using your credit card and PIN. Cash advances can also be processed in person at a bank or credit union branch by presenting your credit card and identification to a teller. Some credit card issuers provide convenience checks, which function like personal checks but draw funds from your credit line. These checks can be written to yourself for cash or to a third party for payments where credit cards are not accepted.

Another way to send money using a credit card involves person-to-person (P2P) payment applications. These platforms allow users to link a credit card as a funding source to send money to other individuals. After linking your credit card, you can select the recipient, input the desired amount, and choose your credit card to initiate the transfer. This allows for quick transfers to friends, family, or other individuals.

Understanding the Financial Implications

Utilizing a credit card to send money carries distinct financial implications that differ from standard credit card purchases. These transactions are generally more expensive due to specific fees and interest rate structures. Understanding these costs is important before proceeding.

Cash advances incur a transaction fee, often a percentage of the amount withdrawn or a flat fee, whichever is greater. This fee commonly ranges from 3% to 5% of the advance amount, with a minimum fee often set at $10. For example, withdrawing $100 could cost $10 in fees, while a $1,000 advance might incur a $50 fee. Interest on cash advances begins accruing immediately from the transaction date, unlike purchases which often have a grace period. The Annual Percentage Rate (APR) for cash advances is higher than the APR for standard purchases.

When using P2P payment applications with a credit card, a fee is charged by the app provider for using a credit card as the funding source. Venmo and Cash App generally charge a 3% fee for these transactions. PayPal may also charge fees for personal payments funded by a credit card, often around 2.9% plus a fixed fee. Many credit card issuers classify these P2P credit card transactions as cash advances, meaning you could face additional cash advance fees and higher interest rates from your credit card company.

These transactions can also impact your credit utilization ratio, which is the amount of credit you are using compared to your total available credit limit. Cash advances and P2P payments funded by credit cards increase your outstanding balance, raising your credit utilization. A higher credit utilization ratio, especially above 30%, can negatively affect your credit score. Credit card issuers impose limits on cash advances, typically 20% to 50% of your overall credit limit. P2P apps also have their own daily or weekly transaction limits.

Step-by-Step Process for Sending Money

Executing a cash advance or sending money via a P2P app involves specific procedural steps. The process itself is generally straightforward.

To perform a cash advance at an ATM, insert your credit card and enter your PIN. Select the “cash withdrawal” or “cash advance” option from the menu. After choosing the amount, you may be prompted to acknowledge any associated fees before completing the transaction and collecting your money. For a cash advance at a bank, visit a branch, present your credit card and a valid photo ID to the teller, and specify the amount of cash you need.

If you have convenience checks, fill out the check with the desired amount and payee. You can then cash it at a bank or deposit it into your bank account, similar to a personal check.

To send money using a P2P payment application, first link your credit card to the app. Navigate to the “Wallet” or “Linked Banks” section within the app’s settings. Select “Add Card” or “Link Credit Card” and enter your credit card number, expiration date, CVV, and billing ZIP code. Some apps may require you to link a debit card first before a credit card can be added. Once your credit card is linked, initiate a payment by selecting the recipient, entering the amount, and ensuring your credit card is chosen as the funding source before confirming the transaction.