How to Transfer Money From Credit Card to Bank Account?

Transferring money from your credit card to your bank account can be a useful option in certain situations, such as when you need to access funds quickly or want to take advantage of a promotional balance transfer offer. However, it’s important to understand the potential fees and interest charges associated with this type of transaction.

In this blog post, we’ll guide you through the process of transferring money from your credit card to your bank account and provide some important considerations to keep in mind.

Understanding Credit Card Cash Advances

Transferring money from your credit card to your bank account is considered a cash advance. Cash advances typically have higher interest rates than regular purchases and may incur additional fees. It’s crucial to review your credit card’s terms and conditions to understand the specific fees and interest rates associated with cash advances.

Transfer Money from Credit Card to Bank Account Online

Transferring money from a credit card to a bank account in India is possible, but it’s important to understand the limitations and fees involved before proceeding. Here’s a breakdown of the methods available:

1. Direct Transfer via Net Banking (if offered):

• Some banks in India allow direct transfer of funds from your credit card to your bank account through their net banking platform.
• Benefits: Convenient and potentially faster compared to other methods.
• Drawbacks: Not all banks offer this functionality. Check with your bank for details and any limitations on transfer amounts.

Steps involved (may vary slightly depending on your bank):

1. Login to your bank’s net banking portal.
2. Navigate to the credit card section or transfer funds section.
3. Look for an option like “transfer from credit card” or “cash advance.”
4. Enter the amount you want to transfer and your bank account details.
5. Verify and confirm the transaction.

2. Phone Banking:

• Certain credit card companies might allow transfers by calling their customer service hotline.
• Benefits: This can be done without internet access.
• Drawbacks: Wait times on the phone can be an issue.

Steps involved (may vary depending on the credit card company):

1. Contact your credit card company’s customer service number.
2. Inform them about transferring funds from your credit card to your bank account.
3. Provide the necessary details like transfer amount and bank account information.
4. Follow further instructions provided by the customer service representative.

3. Cash Advance and Deposit

• This method involves withdrawing cash using a credit card ATM cash advance and then depositing the cash into your bank account.
• Drawbacks: This is generally the most expensive option due to high cash advance fees and interest rates applied from the day of withdrawal. It should be avoided unless necessary.

Why Should You Not Transfer Money From Credit Card to Bank Account?

Here are the main reasons why you should avoid transferring money from a credit card to your bank account:

• High Fees: Most transactions involving transferring funds from a credit card to a bank account are treated as cash advances. Cash advance fees typically apply, and these can be a significant percentage of the transferred amount, often ranging from 2.5% to 3%.
• High Interest Rates: Interest on credit card cash advances starts accruing immediately from the day of the transaction. These interest rates are typically higher than the regular purchase rates on your credit card. 
• Negative Impact on Credit Score: Frequent cash advances can negatively impact your credit score in several ways. First, it can increase your credit utilization ratio, which is the percentage of your available credit that you’re using. Second, it might be seen as a sign of financial stress by credit bureaus.

If you must transfer money from your credit card to your bank account:

• Understand the Charges: Make sure you fully understand the cash advance fee and the applicable interest rate before proceeding.
• Transfer Only What’s Necessary: Only transfer the amount you need and have a plan to repay it as soon as possible to minimize the interest charges.

What Are the Alternatives Options to Get Cash?

Essentially, transferring money from a credit card to a bank account is a very expensive way to access cash. It’s like taking out a short-term, high-interest loan.

Here are some alternative options to consider if you need access to cash:

• Personal Loan: Look into personal loans offered by banks or lending institutions. Interest rates on personal loans may be lower than credit card cash advance rates.
• Salary Advance: If your employer offers salary advance options, it can be a more economical way to access immediate funds.
• Savings: Try tapping into your savings to cover your temporary cash flow needs.

Even though there are certain restrictions involved in transferring funds from a credit card to a bank account, it is still okay to do in case of emergencies. However, an excess of such transfers may land you in trouble. Such transfers are relatively cheaper than borrowing a personal loan or withdrawing cash using a credit card as these involve high interest charges. Hence, depending upon the access to mobile applications, and the amount of funds to be transferred, you may choose to transfer funds from your credit card to your bank account, as and when required.

Also Read: What is Credit Card Settlement and How does it Work?