What is a money transfer credit card?
Most credit cards don't let you transfer money to your bank account and many will charge you interest while you pay them off. However, a money transfer credit card will allow you to borrow money from the card, and transfer it straight into your bank account. Typically, you'll be charged a money transfer fee, which varies by provider.
How do 0% money transfer credit cards work?
With a 0% money transfer credit card you'll be able to move cash into your bank account from the card and pay it off without paying interest for a set period. This could be up to 18 months.
Don't forget that, as with any credit card, you'll need your application to be approved, and you'll need a good credit score to be eligible for the longest interest free periods.
Read more here on how to improve your credit score.
What could you use a money transfer credit card for?
Money transfer credit cards can be useful for a number of things including:
paying off an overdraft
paying off a loan
make a large purchase where a credit card wouldn't be accepted.
So, for example, if you got a money transfer card with a limit of £2,500, you could use £1,000 to pay off an overdraft, £1,000 to pay off a loan, and make a purchase with the remaining £500.
You can read more about how to use a money transfer credit card here.
How to find the best money transfer card for you
Before you get a money transfer credit card, it's important to decide whether it's the best product for you. You shouldn't use a money transfer credit card unless it's planned, affordable, and for a specific reason.
We’ve compiled a few things you should consider when comparing money transfer credit cards:
0% interest period: The interest-free period for money transfer cards isn't always as long as you'd like it to be. Be aware of when your interest-free period ends, so you can either pay off the balance, or transfer your debt elsewhere.
The money transfer fee: Most money transfer credit cards charge a fee to transfer money into your account. Typically, this fee ranges from 2% to 4% of the balance transferred. It's important to factor this in when comparing money transfer credit cards. Generally, the lower the fee, the better.
Time window for transfers: Many money transfer cards require you to make your transfer within 60 days of getting your card. If you fail to do so, you'll lose out on the 0% period. So avoid opening a money transfer card with a plan to transfer money several months later.
Fees: Most cards charge fees for late payment and exceeding the credit limit. While you should never aim to miss payments or exceed the credit limit, it is worth checking these before you apply.
How much do money transfer credit cards cost?
With a bank transfer credit card, you don't pay any interest as long as you repay the balance each month. In the table above, you’ll also find 0% interest money transfer credit cards, which will give you a longer time frame to pay off what you owe. However, It’s important to always make at least the minimum payments each month to keep your 0% rate. You should treat it like you'd treat a loan.
Whether you choose a 0% interest money transfer credit card, or one that charges interest, you will still have to pay a money transfer fee - these usually cost 2%-4% of the amount you transfer.
For example, a 3% fee on a £2,000 transfer will cost you £60. That means you'll owe £2,060. If the card's interest-free period is long enough for you to pay off the balance in full, the £60 fee could be a lot less than the interest you'd pay on a loan.
A money transfer credit card comes with the same other types of fees as normal credit cards. You can avoid some charges if you understand how they work. Some of the things you might have to pay include:
late payment charges
charges for going over your credit limit
charges for spending abroad
dormancy charges
and other charges and fees.
