Money transfer credit cards are designed for people who want to transfer money straight into their bank account from a credit card. You can then use these funds however you want to, whether that’s to help pay off existing debts or to cover a major purchase, such as home improvements.
Many money transfer cards offer 0% promotional rates for several months. But be aware you will have to pay a fee for transferring the cash straight into your account.
You’ll also need to have a disciplined approach to using a money transfer card as the interest rate you’ll pay on any outstanding balance will typically jump to nearly 19% after the interest-free period comes to an end.
Should I use a money transfer to pay off existing debts?
Getting into more debt to pay off existing debts might not sound wise.
But if you’re disciplined and need to pay off an expensive overdraft or payday loan, a money transfer card can be a useful tool to help clear that debt more cheaply. Just make sure you pay off your debt within the 0% period.
Should I use a money transfer for a cash injection?
If you’re looking to fund something big, such as home improvements or a new car, a money transfer card can work out cheaper than a personal loan.
Some money transfer cards offer up to 40 months’ interest-free which means you have more than three years to pay off your debt without paying interest.
Just be sure you can definitely afford to clear your debt before the 0% window ends and interest kicks in.
What are the catches?
Remember, you’ll have to pay a fee of up to 4% to transfer the cash to your account. You’ll usually need to transfer the money within 60 days of opening your account, otherwise you’ll lose out on the interest-free deal and the transfer fee will go up.
If you’re strict then a money transfer card could help you pay debts off faster
You should also pay off the debt before the 0% window ends, otherwise you’ll start to pay interest on your debt. If you know you’re not going to be able to pay off the balance in time, a credit card that offers a low rate of interest for the life of the debt, rather than a 0% deal for a limited period, could be a better option.
If you’ve already got credit card then you may not be able to get another one from the same provider. Always check the terms and conditions thoroughly before applying.
The little-known way to getting accepted
Our credit card search tool estimates the likelihood of being accepted for a credit card WITHOUT leaving a mark on your report.
All you need to do is enter your details and it will return a list of deals, with an indication of how likely you are to be accepted.
Just click on the ‘Will I get this card?’ button next to each deal and you’ll get a score out of 10 which is colour-coded red, amber and green. The closest to 10 are most likely to accept your application.
Are there any alternatives to money transfer credit cards?
Yes – if you’re paying interest on your overdraft, some current accounts offer interest-free and fee-free overdrafts, so you should consider switching to one of these. These deals may be limited to just a few months, so if you need longer to pay it off then a money transfer card may be better.
If, on the other hand, you’re looking to make a large purchase, you could consider a 0% purchase credit card.
Although the 0% deals on offer are not quite so competitive (the top deals currently offer more than two years’ interest-free), the advantage is there is no fee to pay. But only go for this option if you know you can clear your debt before the 0% window ends.
If your borrowing needs are fairly substantial, a personal loan might be a better option – and the good news is interest rates are currently very competitive.