Need money in emergency? Know this before transferring money from credit card to bank account!

Many times such emergencies come in life when we need money immediately and we do not have that much money in our bank account. In such a situation, our eyes go to the credit card and the question comes in our mind – ‘Can I transfer money directly from credit card to my bank account?’

The answer is, yes, of course you can. But it is not as straightforward and cheap as it seems. This process is called “Cash Advance”, and it can be a big hit on your wallet. Don’t mistake this for an ordinary purchase.

This facility is meant for serious emergencies and not for everyday expenses. Before using it, it is very important to understand its methods and most importantly, its disadvantages.

What are the methods of transferring money?

1. Net banking way
Some big banks provide this facility on their net banking portal.

• How to: Login to your bank’s net banking. Go to the ‘Fund Transfer’ or ‘Credit Card’ section. There you will get an option like “Transfer from Credit Card”. Fill in the required information (account number, amount) and complete the transaction.
• Advantage: This is one of the easiest and fastest methods.
• Disadvantage: Not every bank provides this facility and it has a limit.

2. With the help of phone banking
If there is no net banking option, you can also get it done by calling customer care.

• How to: Call the customer care number given on the back of your credit card. Tell them you want to transfer money to your bank account. They will complete the process by taking account information from you.
• Advantage: It does not require internet.
• Disadvantages: May have to wait a long time on calls.

3. Withdraw cash from ATM and deposit it
This is the most direct but most expensive route. You can withdraw cash from an ATM using your credit card, just like you do with a debit card, and then deposit that cash in your bank account.

• Advantage: Money comes into hand immediately.

Disadvantages: This is the most expensive method and should only be considered a last resort.

Why is this feature an expensive trap?

Now coming to the most important question. Why should you not transfer money from credit card to bank account?

1. Huge Fees (Cash Advance Fee)
As soon as you make this transaction, the bank immediately deducts a fee of 2.5% to 3% on that amount. That is, if you transfer Rs 10,000, then Rs 250 to Rs 300 will be deducted immediately.

2. Killer Interest Rates (Starting Immediately!)
This is its most dangerous aspect. When you buy something with a credit card, you get a ‘grace period’ of 40-50 days to repay the bill, in which no interest is charged.
But there is no grace period in case of cash advance! The day, the hour, the second you withdraw your money, interest starts accruing on it. This interest rate is also much higher than the interest rate on your normal purchases.

3. Direct attack on credit score
When you repeatedly take out cash advances, it sends a signal to the credit bureaus that you are in serious financial trouble. Banks do not consider this a good thing and it can cause your credit score to drop rapidly. You may also face difficulty in getting a loan in future.

final advice
Transferring money from credit card to bank account is a facility that should be used only when you have no other option. This is an expensive loan that can easily trap you in debt.

It is wise to use the credit card only for shopping and bill payment and not for withdrawing cash.