There are four main ways to transfer money from your credit card to your bank account.
The first is by visiting a teller at your bank. You can ask the teller to withdraw funds from your credit card and deposit them into your bank account.
The second option is to do the same process yourself at an ATM. You’ll put your credit card into the machine and withdraw cash. Then you can start another transaction and deposit the funds into your bank account.
If your credit card and bank account are with the same institution, you can likely do an online money transfer. This is the most convenient method since you can do it anywhere using online banking or your bank’s app.
Finally, you can use a credit card convenience cheque. Typically, you’ll need to ask your financial institution for these cheques. Credit card convenience cheques work the same as a regular cheque: you write a cheque, deposit it into your bank account, and then have the funds available.
Here’s the catch: All of these methods are considered to be cash advances, which come with important drawbacks.
How does a cash advance work?
A cash advance is when you use your credit card to borrow cash. It’s an incredibly expensive method of borrowing money, thanks to high interest rates that start being charged as soon as you withdraw the money — there’s no grace period like there is for purchases.
Sometimes the cash advance rate on your credit card is the same as the purchase APR, but it may be higher.
On top of the high interest rates, you may also be charged a cash advance fee for using the service. This could be a flat fee, a percentage of the amount you withdrew, or a combination of the two.
Will transferring money from my credit card to my bank account hurt my credit score?
No, not if you are careful. Using your credit card to get cash won’t have an impact on your credit score.
However, by using your credit card to get a cash advance, you are increasing your credit utilization ratio. A high credit utilization ratio can have a negative impact on your credit score, so you should consider your utilization before making the choice to get a cash advance.
If you do need to take out a cash advance, you should start paying it off as soon as possible to help avoid any fees. Late payments on this balance can also hurt your credit rating.
Pros and cons
As mentioned above, using your credit card for a cash advance is generally not recommended by financial experts. However, there are a couple of instances where this option can come in handy. Keep in mind that you may be able to pay bills with a credit card instead of accessing a cash advance, so look into all your options before making this decision.
- Fast and easy access to cash
- Good option for an emergency
- High interest rates
- Additional fees
- Can impact your credit score
- Can easily lead to credit card debt
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Alternative ways to get cash into your bank account
Cash advances from your credit card can be handy in an emergency, but they are not the best route to take. If you need cash, you’re likely better off considering a personal loan or a line of credit. Both of these options have better rates and often offer more available funds, so they’re more financially-friendly solutions.