This is also considered to be a cash advance, so it’s relatively costly compared to standard credit card transactions.
Cost of Transferring Money from your Credit Card
The cost of transferring money to your account from your credit card is different from a standard transaction. Once the money is transferred from your credit card account, it’s considered to have been taken out as cash and processed as a cash advance.
The Way that cash advances work is that there is no grace period. With standard credit card transactions, there is a grace period where no interest is charged on the purchase. If you pay the funds off right away, then you aren’t charged any interest on the purchase. Cash advances start interest charges as soon as the funds leave the account.
They also tend to cost more since the average cash advance rate is usually around 2% higher than the standard purchase APR. With these, you also incur more debt. So, if you can get away with using your credit card instead of your debit card, it could save you money.
How to Transfer Money from your Credit Card
Transferring money to your bank account can be done in a few different ways. Because the interest rates on cash advances are higher, unlike purchases considered to be standard transactions, it’s usually done to use the funds for a purchase or bill that doesn’t accept credit cards. Here are a few ways you can do so.
Withdraw Funds from an ATM
In order to transfer funds from your credit card to your account yourself, you need to withdraw cash from an ATM. Once that’s done, you can deposit the funds into your bank account. It’s important to remember, though, that the amount you’re allowed to withdraw from your credit card account is based on your available credit limit.
Most credit card providers don’t allow you to withdraw the total amount of available funds using a cash advance. Your specific credit card will have its own cash advance limit.
E-Transfer
Depending on the credit card you have and if it’s prepaid or not, the lender may allow you to send the money to your account via e-transfer, also referred to as an online transfer. Most prepaid credit cards allow you to do this. It doesn’t have to be to your own account, either. You’re able to transfer to someone else’s account as well.
Through Your Bank
Another way to transfer the funds from your credit card to your account is through your local bank branch. While you still have to take out the funds as cash and transfer cash into your account, the teller is able to do that for you right away, and you never actually have to handle the cash.
Bill Payments
Another way some credit card issuers, mostly prepaid cards, allow you to transfer funds to your account is by setting up your bank account for bill payments. This allows for easy transfers between accounts.
Credit Card Cheques
Depending on your credit card lender and card, you may be able to get credit card cheques. These are also known as credit card convenience cheques. These personal cheques allow you to make transactions via cheque instead of using your physical card.
If you have a balance transfer credit card, this is a common way to transfer money from your credit card to your bank account to use or pay off the balance on your previous credit card account.
Are Credit Card Cheques Easy to Use?
Credit card cheques are pretty easy to use and a good alternative to money orders; however, they are considered cash advances. The biggest risk with credit card cheques is the interest rate. It’s typically higher than your purchase interest rate, and there is no grace period, so you start paying interest immediately. A cash advance interest calculator can help you determine the actual cost.
When using a credit card or cheque, it’s important to note that there are often fees for cash withdrawals and cash access. Before you take out any funds, you also need to consider cash advance risk warnings. Since there are many quick-cash options in Canada, you can easily find alternatives to cash advances.
Buying Crypto With a Credit Card
With a lot of major platforms, you’re able to purchase cryptocurrency with your credit card. With this process, though, you’re usually looking at fees ranging from 3% to 9%. Since these are also considered credit card cash advances rather than digital wallet transfers, they can add up quickly.
Since it’s considered to be a cash advance, you need to consider your cash advance limit percentage. You also need to consider any foreign exchange fees that may occur with your cryptocurrency purchase, depending on the platform that you’re using.
A plus of using your credit card, though, is earning more rewards points, since many cards let you convert them to cash. If you want to save money on fees, though, you can use a prepaid card transfer, a wire transfer, or even an e-transfer from your bank account.
Balance Transfer Credit Cards
Balance transfer credit cards are one of the most common reasons that Canadians transfer funds from their credit card to their bank account. What exactly are they, though? Balance transfer cards are credit cards that offer promotional rates when you transfer your balance from your current credit card to your new balance transfer card.
You have to apply for balance transfer credit cards just like you would for any credit card. How it works is if you’re approved, you can take the funds from the card and pay off the previous card. These cards have a promotional rate of 0% for a limited time, with some transaction fees. As long as you pay off your balance before the promotional period ends, you can end up saving a lot of money.
It’s also important to note that with credit card balance transfers, there’s no cash advance fee when transferring funds from your credit card to your chequing account. The money is intended to pay off your other credit card, so you follow the promotional interest rate of 0%. When this promotional interest rate ends, though, you could end up having higher interest rates and hefty fees.
Sending Money Transfers from Credit Cards
In Canada, you can send money to others using Interac e-transfers. If you’re trying to send money abroad to someone in another country, e-transfer won’t work, but there are plenty of other money transfer options available.
When using money transfer apps to send funds to other parts of the world, you don’t have to use your bank account to send the funds. You can use your credit card. If you do this, though, you have to remember that you will have to pay an exchange fee as required by the credit card policy. That said, it’s not treated as a cash advance; it’s considered a standard transaction.
Transferring From Credit Cards to the Top 5 Banks
With any of the financial institutions in Canada, including Scotiabank and TD, when you transfer money from a credit card to your bank account, it’s considered a cash advance. The only exception to this is if you’re doing a balance transfer and have been approved for a balance transfer credit card.
Even if you already bank with the same institution that issues your credit card and aren’t going through a different bank, you still have to withdraw the cash before it’s transferred to your account. While prepaid credit cards do allow you to transfer funds from your credit account to your bank account, traditional credit cards don’t.
Credit Card Transfers and Your Credit Score
While transferring money from your credit card to your bank account doesn’t directly impact your credit score, the balance you hold on your credit card does. Even if you make all of your monthly payments on time, holding a balance of more than 35% of your available balance can negatively impact your credit score.
As long as your credit utilization ratio falls between 0% and 35% and you make your payments on time, then you’ll see an improvement in your credit score, helping to erase credit history that has negatively affected your credit. It will also reduce your credit card debt.
Credit Card Cash Advances Vs Payday Loans
While both money borrowing costs are expensive, credit card cash advances are actually cheaper than payday loans. Here’s a look at how the two compare.
| Credit Card Cash Advances | Payday Loans |
| Have an upfront fee | No upfront fees |
| No interest-free grace period | Can borrow up to $1,500 |
| Cash withdrawal limit | Fees are $14 per $100 with an APR of 300% or more |
| ATM cash advance fee | Heavy penalties for late payments |
| It can influence your credit rating based on your credit card balance | Usually need to be paid back anywhere from 2 to 6 weeks |
| Have a high annual percentage rate | Don’t impact your credit score unless you default |
How Much of Your Credit Card Limit Can You Use as a Cash Advance
How much money you can use as a cash advance on your credit card depends on your credit limit and your credit card issuer. With most credit cards, you can withdraw amounts ranging from 10% to 40% of your available credit. These credit card charges will be added immediately, and the total cost depends on how many monthly repayments it will take to pay them off.
Transferring Credit Card Rewards to Cash
Depending on your credit card, you can redeem rewards for cash by applying them as a statement credit or transferring them to your bank account. These are the only two ways to do so.
Do Foreign Exchange Fees Apply to Transfers?
Whether you’re sending money from a credit card or doing an online money transfer, even a prepaid visa transfer, you will have to pay foreign exchange transfer fees when you transfer money using an international money transfer or a cross-border money transfer.
Even if you use a money transfer app, you have to consider different fees, including:
- Remittance fees in Canada for remittance services
- Currency conversion fees
- Credit card money transfer fees
- Fees for bank account transfers
- Any additional fees and flat fees
Before you decide which one to use, though, you should compare transfer fees. Some charge different fees, while others have low fees for regular transfers; in some cases, your first transfer could be free. Some are better for business expenses, some are only a good option in an emergency, and others have added benefits and savings. These are all things you should be aware of before you spend your paycheque on fees.
The Fastest Way to Pay Off a Cash Advance
Since you’ll be charged interest right away, on top of your existing debt and other debts, the only way to stop the interest is to pay off the exact amount, including the flat fee, as soon as you can. Whether you did a credit card to debit transfer or not, any cash advance will work the same way.
If you’re unable to make the payment right away, then you want to come up with a cash advance payoff strategy. With this cash advance repayment plan, it’s best to pay more than the minimum payment to reduce your interest charges.
- Some ways you can use to pay this off quickly include:
- Take your card to a bank and set up payments to your current account at your local branch.
- A teller cash withdrawal if you can’t make the payment through your bank
- A e-transfer if it’s within your interac e-transfer limit (to a different bank)
- With a balance transfer credit card in the balance transfer promotional period with 0% interest offer (best credit card to borrow money and get extra funds to pay off debt)
