- What Are The Implications of Transfering Money From a Card to Your Bank Account?
- Why Do You Want Money in Your Bank Account?
- 4 Ways to Transfer Money From Credit Card to Bank Account
“There are some things money can’t buy. For everything else, there’s MasterCard.”
That’s MasterCard’s long-running ad campaign. And it can’t be further from the truth.
Thanks to Demonetization and UPI, India is moving to a digital economy. And most businesses today accept credit cards.
India – Where Cash Comes First
However, in India, many people and businesses still prefer cash.
India has a population of 130 Crores. Less than 30 crore people in India use a smartphone that is required to make digital payments.
So, what happens when you need actual cash? Can your credit card come in handy?
What Are The Implications of Transfering Money From a Card to Your Bank Account?
Except for cash advances, credit cards are not meant to give you cash.
Some of the methods recommended here are costly – Up to 5% of the money will be charged as fees. For a money transfer of Rs 10,000, you can be charged up to Rs 500 as fees.
Other options are hacks to get cash. You might be banned from these services if you use it for unintended purposes.
Why Do You Want Money in Your Bank Account?
Moving money from your card to your bank account is possible. However, transferring money often attracts additional charges.
If you can use your card directly, why pay those extra charges?
#1: Want to Pay Someone?
The most common use case for needing cash is to pay someone.
You might want to pay your maid, pay back the loan you took from your friend, or help someone in need.
If you are transferring money to an individual, and you don’t have enough money, use the wallet option described in this article.
#2: Want to Pay Your Rent?
If you live in a rented apartment, your landlord is not going to take kindly to missed rent payments.
If you are short of cash, you can use services like NoBroker or RedGiraffee to make payments using a credit card.
Guide Alert: Learn how to pay rent using a credit card. As a bonus, you can earn reward points!
#3: Want to Pay EMI?
If you have EMIs, you likely have standing instructions to deduct money from your account automatically.
To pay EMIs, you must have money in your bank account. Otherwise, your credit score will be impacted. You will also face additional charges like ECS bounce fees.
If EMI is your problem, use any of the options listed in this guide to transfer money.
#4: Looking to Build Your Credit Score?
If you are looking to build your credit score, a credit card is a good option. Use your credit card to pay your rent. Or use credit cards for all your online/offline spends.
Transferring money from your credit card is not a recommended way to build your credit score.
#5: Want to Earn Points on Your Card?
One of the arbitrage opportunities many people used earlier was the Paytm hack.
Earlier, with PayTm, you could add money using a credit card free of charge. You could also withdraw the same money, free of charge, to your bank account.
Some people saw an opportunity. They abused the option PayTm offered to rack up credit card points. Soon Paytm caught up and introduced fees to withdraw money to your bank account.
Most credit cards do not award you reward points for loading money to a wallet like Paytm. Check with your credit card issuing bank to see if wallet loads are eligible for reward points.
Warning: Wallets might charge you additional fees beyond a certain threshold. E.g., Paytm will charge a 2% fee for wallet loads more than Rs 10,000.
4 Ways to Transfer Money From Credit Card to Bank Account
If using your credit card directly is not an option, consider any of the options below to get money in your account.
#1: Withdraw Money From ATM
Most cards allow withdrawing cash from your credit cards.
Find an ATM, insert the card, type the PIN and required amount, get cash. The process is the same as withdrawing money using debit cards.
However, cash withdrawals from credit cards are referred to as cash advances. Often, banks charge a fee on cash advances ranging from 1.5% to 3%. The fees are usually capped at Rs 500.
Besides, the rate of interest for the amount withdrawn can be as high as 4% per month.
Once you receive the cash, if the ATM is also a Cash Deposit Machine, you can add the money to your bank account without visiting a local branch.
Pro Tip: Cash advance limit and your credit limit is different. Log into your card portal to check your cash withdrawal limit.
#2: Use Wallets
Wallets like PayZapp, Paytm, Freecharge, etc., can be used to transfer money from your card to your bank account.
Step #1: Open your wallet account
Step #2: Load money to your wallet using a credit card
Step #3: Request to withdraw the money to your linked bank account
That’s it! You can get money transferred instantly to your bank account in just three steps.
However, most wallets will charge you a convenience fee of up to 5%. Wallet loads above a certain threshold also attract additional charges.
Hack: Don’t want to pay the convenience fee? Load money to your wallet using a credit card. Transfer money to your friend’s wallet for free. Ask them to transfer the money to you using UPI. Buy them a Biriyani for helping you out 🙂
#3: Use NoBroker
No broker has an option to pay your rent. It will transfer the money from your credit card to your landlord’s account.
However, NoBroker does not mandate rent agreements. You can use this loophole to pay yourself or your spouse the money.
No Broker typically charges a 2% fee. However, currently, NoBroker charges only 1% as a promotional offer.
Warning: Misuse of the platform can potentially result in your account getting banned.
#4: Use Instamojo
Instamojo is a payment platform in India. You can create payment links and send them to others. The recipient can pay using a credit card.
Sign up for Instamojo as a receiver.
You can then send the link to yourself or your spouse to make payments with a credit card.
Charges are 2% + Rs 3 for every transaction.
Can I use Moneygram to transfer money using a credit card?
No. Transfers within India are not allowed for Moneygram. You can pay someone outside India. You can also receive payments in India that originated from outside the country.
Is Paydeck a reputed site to make payments?
I haven’t used it. During my online research, especially on Quora, I saw people recommending Paydeck.
However, I could not find any trusted reviews online. Most of them seem to be placed by people associated with Paydeck.
The company also seems to have only three employees on LinkedIn. There’s no evidence to claim that Paydeck is fraudulent. However, I recommend using other bigger and established businesses.
Will my credit score get impacted if I take out money from my card?
No. Unless you fail to repay the credit card on time, your credit score will not be impacted negatively.
Can I swipe my credit card for instant cash?
There are a few businesses that offer this service. Swipe your credit card, walk out with cash. They will often charge a premium of 3-5% for these transactions.
In India, money for a credit card swipe is a grey area. You are not technically breaking any rules if you do it. However, be aware of the added costs. You can also potentially end up with fake currency.
I recommend sticking to established and legal channels while dealing with money.
Over To You:
Do you have other innovative ways to transfer money from a credit card to your bank account? Let me know via the comments below.
The paytm trick still works and you get the cash plus the reward points. I have even a better idea which I use to get the money plus the reward points plus the 48 days Grace period to pay the money and use the money to get more money in the period while earning reward points alongside.
Can you share your idea Rakshit.