How to Send Money From a Credit Card
Navigate the process of sending money from your credit card. Understand the various methods, their associated costs, and practical steps.
While credit cards are primarily for purchases, they can be used for direct money transfers when other options are unavailable. Understanding the specific rules, associated costs, and financial implications is essential before initiating any transfer.
Understanding Different Methods for Sending Money
Several methods exist for sending money from a credit card, each with its own concept and fee structure. A cash advance involves borrowing cash directly against your credit limit. Unlike standard purchases, a cash advance typically incurs a fee (often 3-5% or a flat fee), and interest begins accruing immediately without a grace period. The annual percentage rate (APR) for cash advances is frequently higher than for purchases, sometimes reaching 20-30% or more.
P2P payment applications, such as PayPal, Venmo, or Cash App, allow users to send money by linking a credit card as the funding source. While using a linked bank account or debit card for these apps is often free, credit card-funded transactions usually incur a fee, typically around 3% of the transaction amount. This fee applies because the P2P platform processes the transaction as a purchase, and the credit card issuer may also classify it as a cash advance, leading to additional fees and immediate interest.
Third-party money transfer services, such as Western Union or MoneyGram, accept credit cards for sending funds. These services are designed for money transfers, including international transactions. Using a credit card can involve their own transfer fees and potentially unfavorable exchange rates, in addition to any cash advance fees and higher interest rates from your credit card issuer.
Important Considerations Before Initiating a Transfer
Before any credit card money transfer, understanding the financial implications is essential. These transactions typically carry high interest rates, often significantly exceeding those for regular purchases. Interest usually begins to accrue immediately from the transaction date, as there is no grace period. These immediate charges, coupled with upfront fees, make sending money from a credit card a considerably expensive option.
Credit card accounts have transaction limits for cash advances or money transfers, often lower than your overall credit limit. High credit utilization, using a significant portion of your available credit, can negatively affect your credit score. Credit utilization is a key factor in credit scoring models; rates exceeding 30% can lead to a lower score. Lenders may view frequent cash advances or high utilization as an indicator of financial distress, impacting your ability to obtain credit in the future.
Executing a Money Transfer from Your Credit Card
After considering the financial implications, executing a money transfer involves specific procedural steps depending on the chosen method. To perform a cash advance, you can visit an ATM or a bank branch. At an ATM, insert your credit card, enter your Personal Identification Number (PIN), select the “cash withdrawal” or “cash advance” option, and then specify the amount. If you do not have a PIN, you may obtain a cash advance by presenting your credit card and a government-issued photo ID at a bank branch that processes cash advances for your card network.
When sending money via P2P apps like Venmo, PayPal, or Cash App, link your credit card to your account. After selecting the recipient, enter the amount to send, and choose your linked credit card as the funding source. The app will display any associated fees before you confirm the payment, allowing you to review the total amount before finalizing the transfer.
For third-party money transfer services, such as Western Union, create an account on their website or app. Select the send and receive options, including the destination country and how the recipient will receive the funds. After entering the amount, choose your credit card as the payment method, provide card details, and complete the transaction. The service will provide a confirmation number or tracking code.