Guide to Sending Money With a Credit Card

Sending money with a credit card may be a convenient option, especially for emergencies or online transactions. However, it often comes with fees, interest rates, and potential impacts on your credit score.

Here’s a look at which tools and platforms allow you to send money with a credit card, what fees to expect, plus things to consider before you charge a money transfer to your credit card.

Transferring Money From a Credit Card to a Bank Account or Debit Card

Though credit cards are commonly used to pay for goods and services, it’s possible to use a credit card to transfer money to a bank account or debit card. Here’s how you typically do it.

Cash Advance

You may use a credit card to transfer cash into a bank account by using the card’s cash advance feature. A cash advance is essentially a loan against the credit limit on your credit card. The two ways to transfer money to your own bank account or debit card are:

• At an ATM: You may get cash at the ATM using your credit card and a personal identification number (PIN). If you don’t have a PIN, you typically get one by contacting your card issuer. Once you have the cash, you’re able to deposit it into your bank account, either at the ATM or at a branch. You’re then able to access it with your debit card.

• At your bank: If you have a credit card at the same bank where you have a bank account, you may be able to have your bank deposit a cash advance directly into your account. 

To transfer money to someone else’s bank account, you may use a convenience check. Offered by many card issuers, these checks look and act like regular checks. The difference is that the money won’t come out of your checking account. Instead, it’s treated as a cash advance.

However you access a cash advance, card issuers typically charge a cash advance fee, which could be a flat fee (often $5-$10) or a percentage of the advance (usually up to 5%). In addition, the issuer typically starts charging interest right away. The annual percentage rate (APR) for a cash advance may also be higher than it is for purchases.

Recommended: How Do Credit Cards Work?

Money Transfer Services

Money transfer services, such as Western Union and MoneyGram, generally allow you to make a wire transfer directly to a bank account using several payment options, including a credit card. You may initiate a transfer either online or at one of their locations, and you typically need the name, bank account number, and routing number of the recipient’s bank account. Often, the transfer takes place in just a few minutes.

This convenience comes at a cost, however. The money transfer service may charge a transaction fee. In addition, your card issuer could consider this a cash advance, which comes with fees and interest.

Peer-to-Peer Services

Peer-to-peer (P2P) payment apps, such as Venmo, PayPal, or Cash App, let you send money directly to another person’s bank account as long as both you and the recipient are registered with the app. When you make a payment, you generally choose to send the money using a linked bank account, debit card, or credit card.

If you opt for a credit card, the app may involve a credit card processing fee, often 1.5%-3.5% of the amount transferred. Your credit card issuer may consider this type of payment a cash advance (which comes with a fee and interest), or it might be considered a purchase. To confirm this, you may need to contact your card issuer first to ask.

Redeem Cash Back

When you use a cash back credit card, you typically get a certain percentage of what you spend back. If, for example, your card offers 2% cash back, you would earn $2 back for every $100 you spend. Your rewards build up in your account, and you may be able to redeem them in several ways — as a statement credit, check, or direct deposit into a linked checking or savings bank account. 

If you choose direct deposit, this gives you a way to transfer money from your credit card to a bank account at no cost. However, the deposit typically needs to go into your own account. If you want to transfer your cash rewards to someone else, you might need to get it deposited into your account, then transfer it to someone else using a payment app.

Factors to Consider When Sending Money From a Credit Card

Before you use your credit card to send money, here are some factors you may want to keep in mind. 

Fees

With the exception of redeeming cash back rewards, any time you use your credit card to send money to a bank account, you’re almost certain to incur fees. The service providing the transfer may charge a credit card processing fee. And, on top of that, your credit card issuer is likely to charge a cash advance fee, which may be a fixed amount or a percentage of the amount you’re transferring from your credit card account. 

Interest

Both credit card purchases and cash advances are loans that come with interest charges. With purchases, however, you may avoid accruing any interest by paying your statement balance in full and on time. With cash advances, on the other hand, interest typically begins to accrue immediately from the day of withdrawal. In addition, the cash advance APR is often higher than the APR for purchases. Cash advance interest rates generally range from 15.00%-30.00% APR. 

Credit

Whenever you use your credit card to make a purchase or a cash advance, you’re using up some of your available credit. If you use your credit card to send someone (or yourself) a large amount of money, you could end up exhausting your credit limit, which could negatively impact your score. It’s generally recommended to keep your credit utilization ratio (how much of your total available credit you’re currently using) under 30%. 

Recommended: What Is a Credit Utilization Ratio & How Does It Work?

Pros and Cons of Sending Money With a Credit Card

Alternatives to Using Credit Cards to Send Money

A credit card may be a convenient way to send money, but also a costly one. Here are some other options to consider.

Using your debit card: If you link a P2P payment app to your debit card (rather than your credit card), you’re typically able to send someone money without cost. 

Writing a check: It’s old school, but it works. If you have access to paper checks, you simply write someone a check and either give it to them or send it in the mail. Some banks may even allow you to deposit a check into another person’s account using a teller if you have their full name and account number.

Sending a money order: Though not without charge, you may purchase money orders at banks and credit unions (as well as some big box stores, post offices, and gas stations) for a small fee. You’re generally able to use cash or a debit card to buy a money order. The payee then cashes the order at a local bank or credit union or deposits it into their account. You get a receipt, so if the deposit never goes through for some reason, you have proof of the money order.

Recommended: How to Get Cash Back With a Credit Card

The Takeaway

If you’re in a pinch, you may transfer money from your credit card to a bank account with a cash advance, a convenience check, payment apps (such as Venmo), or money transfer services (such as Western Union). However, it’s generally expensive to transfer money from a credit card to a bank account because credit cards are designed to be used for purchases, not as cash loans. 

There is one complimentary way to transfer money from your credit card to a bank account — by redeeming your cash back rewards.

If you’re in the market for a new credit card, it can be a good idea to shop around and compare credit card rates and rewards (such as cash back). With Lantern by SoFi’s online credit card marketplace, it’s easy to compare multiple card options matched to your needs and qualifications with just one application.