How Can You Send Money With a Credit Card?

While credit cards primarily facilitate purchases, specific mechanisms allow for cash transfers. These methods can provide immediate access to funds, which may seem convenient. Understanding these processes and their distinct considerations is essential for anyone using their credit card beyond typical retail transactions.

Obtaining Cash Directly from Your Credit Card

One direct method of accessing cash from a credit card is through a cash advance, which involves borrowing money against your available credit limit. Unlike a standard purchase, you obtain liquid funds. Cash advances can be performed at an automated teller machine (ATM) if you have a Personal Identification Number (PIN) for your card, or by presenting your credit card and identification directly at a bank teller’s window. Some credit card issuers also permit cash advances over the phone, where funds are transferred to your checking or savings account.

The amount of cash you can withdraw through a cash advance is typically capped at a percentage of your total credit limit, often around 30%. This limit is usually lower than your overall purchasing credit limit. The requested cash amount, along with any applicable fees, will reduce your available credit immediately.

Another way to access cash from your credit card is through credit card convenience checks. These are blank checks that your credit card issuer may send to you, allowing you to draw funds directly from your credit line. You can write these checks to yourself to obtain cash, deposit them into your bank account, or use them to pay bills or make purchases where credit cards are not accepted. When used for cash, convenience checks are generally processed as cash advances.

Sending Money Through Digital Payment Platforms

Credit cards can serve as a funding source for sending money through various third-party digital payment services. Peer-to-peer (P2P) payment applications, such as PayPal, Venmo, and Cash App, allow users to link their credit cards to facilitate transfers. After linking a credit card, you can select it as the payment method.

These platforms typically charge a specific fee when a credit card is used, as opposed to using a linked bank account or debit card. For instance, PayPal charges a fee of 2.9% plus a fixed fee, such as $0.30, for personal payments funded by a credit card. Venmo and Cash App both impose a 3% fee for payments made using a credit card.

Beyond P2P apps, online money transfer services like MoneyGram and Remitly also permit funding transfers with a credit card. These services enable users to send money for cash pickup or direct deposit into a recipient’s bank account. The process typically involves selecting the recipient, specifying the amount, and then choosing a credit card as the payment option. Fees for these transfers can vary based on factors such as the amount sent, the destination country, and the chosen payment and receive methods. It is important to note that credit card issuers may classify these P2P and online money transfer transactions as cash advances, which can incur additional fees from your card provider.

Understanding the Financial Implications

Using a credit card to obtain or send money carries distinct financial implications compared to standard purchases. One immediate cost is the cash advance fee, an upfront charge by the credit card issuer. This fee typically ranges from 3% to 6% of the advanced amount or a flat fee of approximately $10, whichever is greater. For example, a cash advance of $1,000 with a 5% fee would incur a $50 charge.

Beyond the initial fee, cash advances are subject to a higher Annual Percentage Rate (APR) compared to the interest rates applied to regular purchases. The cash advance APR can be notably elevated, sometimes exceeding 24%. This higher interest rate leads to faster debt accumulation if the balance is not paid off quickly.

A significant difference is the absence of a grace period for cash advances. Unlike purchases, where interest may not accrue if the balance is paid in full by the due date, interest on cash advances begins to accumulate immediately from the transaction date. Even if repaid within a few days, interest charges will still apply from the moment the funds were obtained.

Cash advances also impact your credit utilization ratio, which is the amount of credit you are using relative to your total available credit. An advance increases your outstanding balance, thereby raising this ratio. A high credit utilization ratio, particularly above 30%, can negatively affect your credit score. While the advance itself isn’t reported differently on your credit report than a regular charge, the elevated balance can influence your score. If increased debt makes it difficult to manage payments, missed payments can significantly harm your credit score. Issuers may also apply minimum payments to balances with lower interest rates first, allowing high-interest cash advance balances to persist and accrue more interest.