How Can I Send Money With My Credit Card?

Credit cards are primarily designed for making purchases, allowing consumers to buy goods and services on credit. However, specific mechanisms allow a credit card to send money to another individual or access cash. Using a credit card for these purposes differs significantly from typical spending and often involves different terms and costs. These methods can provide immediate access to funds, but they come with distinct financial implications.

Methods for Sending Money Using a Credit Card

One direct method for sending money or obtaining cash from a credit card is through a cash advance. This allows a cardholder to withdraw cash against their credit limit. This can be done at an automated teller machine (ATM) by inserting the credit card and entering a Personal Identification Number (PIN). Cardholders can also visit a bank teller and request a cash advance in person, presenting their credit card and identification. Some credit card issuers may even provide convenience checks, which function like personal checks but draw funds from the credit card’s cash advance limit.

Another common approach involves using peer-to-peer (P2P) payment applications, such as PayPal, Venmo, or Cash App. These platforms enable users to send money digitally to others by linking a credit card to their account. Users link their credit card within the app’s settings and select it as the funding source when initiating a payment, entering recipient details and the amount. Not all P2P apps support credit card funding for direct money transfers; for instance, Zelle does not allow credit card connections.

Financial Considerations and Limitations

Using a credit card to send money or obtain cash has specific financial consequences. Cash advances typically incur an upfront fee, commonly ranging from 3% to 5% of the advanced amount, often with a minimum of $5 or $10. This fee is applied immediately. For P2P payment applications, a fee, usually around 3% of the transaction, is charged when a credit card is used to send money, whereas using a debit card or bank account is typically free.

Cash advances are subject to higher Annual Percentage Rates (APRs) compared to regular purchases. Interest on cash advances begins accruing immediately from the transaction date, with no grace period. This contrasts with typical credit card purchases, which often have a grace period before interest applies if the full balance is paid by the due date. Cash advance interest rates can be several percentage points higher than the purchase APR, commonly 20-25% or more.

Using a credit card for cash advances or large money transfers impacts credit utilization, a significant factor in credit scoring. A cash advance increases the outstanding balance, potentially raising the credit utilization ratio—the amount of credit used relative to the total available credit. A credit utilization ratio above 30% can negatively affect a credit score, indicating a higher reliance on credit. Additionally, credit card companies and P2P services often impose daily, weekly, or per-transaction limits on amounts that can be sent or withdrawn, which vary by issuer and platform, restricting the maximum amount accessible at any given time.