How to Transfer Money From a Credit Card to a Bank Account

Credit cards are primarily designed for purchases, but specific mechanisms allow individuals to access their credit limit as cash and deposit it into a bank account. While this can provide immediate liquidity, understanding these methods is important.

Direct Methods for Transferring Credit Card Funds

Accessing cash directly from a credit card involves either a cash advance or convenience checks. A cash advance functions as a short-term loan, borrowing money against your credit card’s available credit line. This amount is added to your credit card balance, reducing your available credit. You can obtain a cash advance by withdrawing funds from an ATM using your credit card’s PIN, visiting a bank branch for an in-person advance with identification, or requesting an online or phone transfer directly to your checking or savings account. Cash advance limits are capped at a percentage of your overall credit limit, such as 30%.

Convenience checks are another direct method, often mailed by credit card issuers. These pre-printed checks are linked to your credit card account, allowing you to access your available credit line. You can write a convenience check to yourself, then deposit it into your bank account or cash it at your bank. Any transaction made with a convenience check is treated as a cash advance by the credit card issuer.

Indirect Methods for Accessing Credit Card Funds

Beyond direct cash advances, other methods can indirectly make credit card funds available. One approach involves balance transfers, primarily used to consolidate existing debt from one credit card to another, often with a different issuer. While a balance transfer does not directly deposit cash into your bank account, it can free up cash that would otherwise be used to pay off the transferred debt, thereby indirectly increasing your available liquid funds. This process involves applying for a new credit card and requesting the transfer of a balance from an old card; the new issuer then pays off the old account.

Another indirect method involves using third-party payment services, such as peer-to-peer payment applications. Some services allow you to send money using a credit card, which could then be transferred to a bank account by the recipient, or by yourself if the platform permits. Credit card transactions through these services may be categorized as cash advances by your credit card issuer. Using these platforms might also violate the service’s terms of service and could lead to additional fees.

Understanding Associated Fees and Interest

Using a credit card to obtain cash comes with specific financial implications, primarily fees and interest charges. For cash advances, a fee is charged at the time of the transaction, ranging from 3% to 5% of the advanced amount, or a flat fee, whichever is greater. This fee is applied immediately. Beyond the initial fee, cash advances carry a higher Annual Percentage Rate (APR) compared to standard purchases, ranging from 20% to 30% or more.

A key difference for cash advances is that unlike standard credit card purchases, which often have a grace period before interest begins to accrue, interest on cash advances starts accumulating immediately from the transaction date. This means there is no interest-free period. For balance transfers, a fee is also common, typically between 3% and 5% of the transferred amount, which is added to the new balance. Many balance transfer offers include a promotional 0% APR period, lasting from 6 to 21 months, but a higher standard APR applies to any remaining balance once this introductory period expires. Transactions made using credit cards on third-party payment services may also incur fees and be treated as cash advances by the card issuer, leading to similar fee structures and immediate interest accrual.

Implications for Your Credit Report

Accessing cash through your credit card can affect your credit report, primarily through changes in your credit utilization ratio. This ratio represents the amount of revolving credit you are using compared to your total available credit. Increasing your credit card balance, especially through cash advances or balance transfers, directly raises this ratio. Credit utilization is a significant factor in credit scoring models, accounting for approximately 30% of a FICO score.

Lenders and credit scoring models generally favor a low credit utilization ratio, ideally below 30%. A substantial increase in your balance, leading to a higher utilization, can indicate a greater reliance on credit and may lower your credit score. Maintaining a consistent record of timely payments on the increased balance is important to prevent negative impacts on your credit score, as payment history is the most influential factor.

While obtaining cash advances or balance transfers typically does not involve a hard inquiry on your credit report, applying for a new balance transfer card would result in a hard inquiry. A hard inquiry can cause a small, temporary dip in your credit score, usually by a few points, and remains on your credit report for up to two years, though its impact on your score generally diminishes after one year.