A money transfer card allows you to borrow money from your credit card, and transfer it as cash straight into your bank account. Typically, you'll be charged a money transfer fee, which ranges between 3% and 5% of the transferred amount.
The transfer takes place after you ask your provider to transfer the money into an account of your choosing.
This should not be confused with withdrawing money from your credit card from an ATM, which is known as a "cash advance" and will mean you'll be charged extra fees and interest.
The money transfer facility is useful if you need to pay off an overdraft, or if you need cash to pay for goods and services. An example would be paying a builder or plumber because they don't accept credit card payments.
With a 0% money transfer credit card, not only can you move cash into your bank account, but you can pay off your balance without paying interest for a set period. This could be up to a year or more.
However, to qualify for the longest 0% interest periods, you need to have a good credit score.
If you need to borrow £5,000 or less, a money transfer card may be a cheaper option than taking out a loan for the same amount."
Money transfer credit cards are very good at doing a very specific set of things.
But the second you step outside their specialist areas, they become at best a compromise and quite possibly the entirely wrong product to take out.
So, what are they good for?
The first thing they excel at is clearing an overdraft. With banks now charging as much as 40% interest on overdrafts, moving that cash to a 0% credit card could save you a lot of money.
The second thing they are highly effective at is providing a cheap loan of up to £5,000 you can use to pay friends, tradespeople or anyone else you owe money to but who doesn't take credit cards.
But if you're looking to save on an existing credit card debt, you'll almost certainly get a better deal with a balance transfer credit card than with a money transfer one.
On top of that, if you're looking to spend the money you transfer on anything you can buy directly with a credit card, a 0% purchase card will work out cheaper.
If you're looking to borrow more than £5,000, it's worth looking into a traditional loan as well, then comparing the total costs of each.
“Balance transfer cards almost always have lower fees than money transfer cards for existing card debt.”
This is the period during which you don’t pay interest on your balance, and begins once you’ve made the transfer. In most cases this should happen within days of receiving the card. The longer the interest free period, the less you’ll have to pay each month to pay off your debt before the 0% period ends.
Most money transfer credit cards will charge a fee to transfer the money. This is either a flat fee or a small percentage of the amount you want to transfer - usually between 3% and 5% of the amount you transfer - and is added to the balance on your new card.
This is the rate you’ll be charged to borrow on your credit card after the interest free period ends. It’s often known as the revert rate. If you plan on continuing to use your card after the 0% period ends, it’s important to get a card with the lowest rate you’ll be accepted for, especially if you think you’ll be carrying over a balance on a regular basis.
CardFinder is an eligibility tool that uses information you provide about your basic financial circumstances to match you with the cards you're likely to get.
It uses a 'soft search' credit check, which doesn't leave a mark on your credit report and thus your credit score is unaffected.
Using CardFinder is the best way to find a credit card because it ensures that you only apply for the cards you have a good chance of getting, which saves you from having an application rejected and damaging your credit score.
CardFinder is a quick and low risk way to ensure you only apply for a card you're likely to be accepted for."
If you’re having trouble keeping up with your payments, don’t be afraid to ask for help. There are several independent services you can contact for free advice.
As well as helping you to manage your debts, these services can also ensure you are receiving all the benefits you are entitled to, including tax credits. This could help top up your income and go towards paying off your debts.
StepChange - StepChange is a charity providing advice and help on budget and debt management. It has a helpline that provides free and independent advice.
Citizens Advice - You can find your local Citizens Advice in the phone book or through its website. Citizens Advice can advise you on legal and financial issues.
National Debtline - The National Debtline offers confidential, free advice to people facing debt problems in England, Wales and Scotland.
Withdrawing money from an ATM on a credit card is known as a cash advance, and it nearly always attracts a cash withdrawal fee, usually of around 3%. In addition, interest is charged on cash withdrawals from the day you take the money out, sacrificing your standard interest-free period.
Several other transactions - including buying stocks and shares, foreign currency and lottery tickets - are frequently treated as “cash-like” transactions by card providers and have the same rules and fees applied to them.
Your credit limit is the amount you can borrow on your credit card at any one time. If you exceed this amount, you can be charged a fee - typically £12 - and it can leave a mark on your credit report.
You won’t usually find out your credit limit until the end of an application process - although you can ask your provider to increase your credit limit at any time.
Credit limits are awarded based on your credit history and your earnings.
Once you've reached your credit limit, you need to make a payment to bring down your balance before you can use the card again. Find out more in your guide on credit limits.
Your credit score is calculated based on your credit history. Each credit reference agency has its own method of calculating this.
Your credit score will go up for things like making payments on time and down for things like being late or defaulting on a loan. Typically, the higher your score, the more likely you are to be offered a lower rate of interest or higher credit limit.
There is no absolute pass or fail mark attached to a credit score, with each lender making its own decision on what it considers acceptable.
If you miss a few payments, generally between three and six, your credit card provider will send you a default notice, giving you at least 14 days to pay the amount stated on the notice. Court action could be used to recover the debt, and if you fail to make the payment, your account will be “defaulted”, meaning you won’t be able to use your credit card anymore. It is possible that your provider may have already blocked spending on your account after the first couple of missed payments. A record of the default will also stay on your credit report for six years, making it harder to get any form of credit throughout this time.
Minimum eligibility criteria define the attributes the provider expects customers to have before offering them a product. It's designed to help customers understand if they should proceed with an application.
Meeting the minimum eligibility criteria is not a guarantee of approval. Eligibility criteria include factors such as age, salary and sometimes other details, depending on the product.
If you’ve made an application for credit, such as a credit card, loan or mortgage, lenders will carry out an in-depth check of your credit report, known as a hard credit check.
This is a detailed look into your financial history, especially your borrowing history, so a lender can see your track record of repaying money you've previously borrowed.
A hard check will show any negative marks on your credit report, like overdue payments, missed payments, previous credit applications and even bankruptcies.
Every time a hard check is carried out, it leaves a mark on your credit report, which can hurt your credit score.
Interest-free credit cards allow you to either transfer a balance, make purchases or transfer cash to a current account without paying any interest on your balance for a set period. However, you must keep making at least the minimum monthly repayment during this time.
Once the 0% deal is over, you will be charged interest on any remaining debt at your standard APR. With balance transfers and money transfers, you will usually have to pay a transfer fee.
Credit card introductory offers include bonus reward points, extra cashback, 0% on balance transfers or 0% on purchases.
Introductory offers are used to attract new customers, but once they expire, they revert to the standard offer or rate. When this happens, you should check if you’re still getting the best deal or whether you need to switch to a different credit card.
A soft credit check is a top-level view of your financial history. It lets lenders assess you for their offers and can show you what you could be eligible for.
Although a soft credit check is recorded, it doesn’t leave a mark on your credit file. This means that while you can see soft checks when you look at your own report, lenders can't. A soft credit check won’t impact your credit score, but you’ll be able to see if anyone has checked your credit history.
In certain industries, some employers will perform a soft credit check if you’ve recently applied for a job with them.
If you take out a balance transfer or money transfer credit card, you will usually be charged a transfer fee to transfer funds. This is usually 1-3% of the total amount you move over for a balance transfer and about 3-5% for a money transfer.
The annual percentage rate (APR) is the interest rate at which you will borrow money on your credit card. It's typically stated as a yearly interest rate and includes any fees and costs associated with the card. In most cases you can avoid paying interest by paying off your credit card balance in full by the due date of every billing cycle.
No, because withdrawing cash by credit card can be far more expensive. This guide explains the cost.
Yes, looking at your credit record helps lenders decide whether to accept you as well as what 0% period and credit limit they will offer you.
Your card provider will decide your credit limit by looking at your finances and credit record after you apply. Here is how credit limits work and how they are decided.
Yes, you can use a balance transfer instead to pay off what you owe on a credit card. You then repay your new card, and many cards offer 0% interest periods.
The amount of money you can transfer from your money transfer card depends on your credit limit.
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