In the era of technology, credit cards have become extremely popular for making payments. They provide convenience as they come with a plethora of credit card reward offers. They also provide great flexibility by allowing you to move money from your credit card to your bank account when needed immediately. However, this convenience comes with a set of costs and fees. In this post, we will learn how to transfer money from a credit card to a bank account. We will also understand its implications and the process involved.
What are Credit Card to Bank Account Transfers?
Credit card to bank account transfers enable you to transfer funds from your credit card directly into your bank account. This mechanism differs from regular credit card transactions, where you use the card for purchases or payments. With this service, you can convert your available credit limit into cash, providing a quick source of funds when required.
Eligibility and Restrictions for Transfers
Verifying whether your credit card is eligible for bank account transfers is essential by consulting with your credit card issuer. Not all card issuers offer this feature to all cardholders. Certain restrictions may be in place for specific individuals.
How to transfer money from a credit card to a bank account?
Before understanding the associated charges and fees while transferring funds, we should know how to transfer money from a credit card to a bank account. Several methods can be used to perform credit card-to-bank account transfers online and offline. These are:
- With the help of E-Wallet
First, download your preferred mobile app or digital wallet. Access the balance section and click “add money to wallet.” Input the desired amount, choosing your credit card as the payment method. Verify the transaction details and confirm the transfer. Depending on its usage terms, you can use the money from the wallet or transfer it to your bank account.
- Using Net Banking
To do a bank transfer:
- Log in to your bank’s Net Banking portal and head over to the credit card section.
- Choose the most convenient transfer option, then enter the amount you want to transfer.
- Fill in all the required details in the form.
- Follow the prompts until the transaction is completed.
- By ATM Withdrawal
Go to the nearest ATM and insert your credit card. Choose “Cash Withdrawal” from the menu and enter the transfer amount. Then, enter your credit card PIN to get cash. After that, deposit the cash into your bank account.
- By Writing a cheque to yourself
You can write a cheque to transfer the funds to your bank account. First, fill in the receiver’s name section as ‘self.’ Then, write all the necessary information we do on a regular cheque. Once completed, deposit the cheque at your nearest bank branch.
Understanding the Costs and Fees
- Transfer Fees
Transfer fees are the most common charges associated with credit card to bank account transfers. There is a minimum cost for each transaction, and these fees can range from 3% to 5% of the transfer amount.
- Processing Fee
Credit card to bank account transfers are often treated as cash advances by credit card issuers. Fees for cash advances are usually higher as compared to other transactions.
- Interest Charges
In addition to transfer fees, interest charges apply to credit cards and bank account transfers. Interest rates for cash advances are higher than those for regular purchases, and there is often no grace period. It means that interest starts adding up the moment the transfer has done.
- Minimum and Maximum Limits
Credit card issuers may levy minimum and maximum limits on credit card to bank account transfers. For example, the minimum transfer amount may be Rs 1000, and the maximum could be a percentage of your credit limit.
- Third-Party Service Fees
Using third-party services for transfers can come with additional fees.
Credit cards have become one of the most widely used payment options in this digital era. They offer great convenience, flexibility and credit card reward offers. When considering transferring money from a credit card to a bank account, it is essential to understand the associated costs and fees carefully.
Checking eligibility is essential as not all credit cards allow such transfers. Online methods like e-wallets and net banking provide ease and flexibility, but offline options like ATM withdrawal and writing cheques are also available. Understanding these aspects will help users make informed decisions when utilizing the benefits of credit cards.