While most people understand the concept of transferring a balance from one credit card to another using a balance transfer, not quite as much is known about transferring funds from a credit card to a debit card or transaction account.
Many credit card providers offer this service, allowing you to transfer money from your credit card to a debit card account, including Commonwealth Bank, BankWest, Westpac, NAB and Bank of Queensland. However, there are certain rules that apply, and certain factors to be aware of.
How you make the transfer from your credit card to a debit card account will depend on your credit card provider. Each provider will have different ways of setting up the transfer, where some will be able to put the transfer through via phone banking, some via online banking, and some in branch.
Most credit card providers and banks offer internet banking, which can offer a very handy way of keeping track of your accounts, making payments, and creating transfers.
Check with your credit card provider if you are unsure how to make a payment, but the process will usually be fairly simple. Log on to your online banking account, access the transfers page, input the transfer you want to make, and confirm the transfer.
If you are transferring funds to a linked debit card account, the funds should be available within a day or so, but if you are transferring to a non-linked account, or someone else’s debit card account, the transfer could take up to three working days.
Again, the amount you can transfer from your credit card to another debit card account will depend on your card provider and your own financial circumstances. Some card providers will have certain daily limits or individual transfer limits, so it’s best to check with your provider before attempting the transfer.
The amount you can transfer will also vary according to the available credit balance on your credit card. You won’t be able to transfer an amount that would take your credit card over its limit.
Most card providers that allow for transfers from credit cards to debit cards treat the transfer as a cash advance. A cash advance is the term used to describe a cash withdrawal made from a credit card, usually via an ATM.
Due to the various fees and interest involved, it’s usually recommended to keep cash advances for emergencies only. To make a cash advance, you may have to pay a cash advance fee, a raised rate of interest (usually higher than the purchase rate) from the day you make the withdrawal, and sometimes other fees as well.
If you plan on making a transfer from a credit card to a debit card, be sure to find out what fees you will have to pay, and what rate of interest you will pay on the transferred amount. While this option may help out in a sticky situation, it can be expensive, so be aware of your card provider’s small print.
Which debit card accounts and transaction accounts you can transfer to will again depend on your card provider. Some providers will only allow transfers between your credit card and your linked account, while other providers will allow transfers from your credit card to any account.
It can also be a good idea to check with the receiving account to make sure it accepts transfers from credit cards.
As you can see, there are various factors to think about before making a transfer from your credit card to a debit card account. First up, read the terms and conditions on transfers from your credit card, then check whether the receiving account accepts credit card transfers.
Find out how much you can transfer, and whether there are any transfer limits. Next find out how much it will cost to make the transfer. Take into account fees and interest, and think about whether this option is the smartest way to transfer money.
Pauline is a personal finance expert at CreditCard.com.au, with 8 years in money, budgeting and property reporting under her belt. Pauline is passionate about seeing Aussies win by making their money – and their credit cards – work smarter, harder and bigger.
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