Credit card usage has skyrocketed to meet daily financial needs in the past few years, especially in the last decade. Furthermore, there are many users who want to know how to transfer money from credit card to bank account instantly. Most of these people use their credit cards to make bill payments, shop, and for other utility needs.
Here are some ways that you can transfer money from credit card to bank account:
Transfer money using a wallet
There are a lot of wallets in the market today that allow you to transfer money from credit cards to wallets for a range of fees (Free to 2%). While apps like PayZapp charge 0% fee, PayTM charges 2% for adding money to the wallet through credit cards. When some people began rotating cash using credit cards, major wallets started charging a fee to avoid any misuse.
New RBI guidelines on pre-paid wallet instruments(dated October 11, 2017) have made it mandatory for all pre-paid wallet users (like Paytm) to link their Aadhaar with their accounts.
KYC through Linking Aadhar to account is the process of a business identifying and verifying the identity of its clients. This process helps to ensure that the services are not misused.
Use apps that help you replace cash payments
Startups like PayDeck allow you to make transfers to bank accounts. People can use this tool to make direct payments using their credit card for rental payments, school fees, professional payments, etc. Traditionally, credit cards were not accepted for making such payments.
Although technically, one can send money to their own account using apps like PayDeck, it is in your best interests to avoid using such apps. This is due to the fact that your credit card issuing bank may deem this cash advance and charge hefty cash advance fees from your account.
Make a cash advance from your credit card
The most expensive way to take out cash from your credit card is by withdrawing cash from your credit card at an ATM. Below are the fees you will have to incur:
- Cash Advance Fee: Credit card issuers charge a cash advance fee whenever a withdrawal is made at an ATM. Even if your ATM says a withdrawal might be free, the card issuer charges you for making a cash advance on a credit card.
- Cash Advance APR: Banks will continue to charge the interest APR on top of the cash advance fee.
- APR Additional charge: Some banks also levy an interest immediately from the date of withdrawal as opposed to the billing date. The billing date is the start of the interest period for non-withdrawal credit card charges.
Cash advances are not recommended unless there is an unavoidable emergency. A personal loan is a better option in most circumstances. The fees and charges on credit cards are very high and add up quickly if bills are not paid on time.
Q1. Can I pay credit card bill through mobile wallets?
Ans: Most credit cards do not allow this feature. What you can do is you can transfer money from your credit card to your bank account. Then, you can pay your credit card bill. However, we do not recommend such practices because this would accumulate interest in the long run and become a financial burden.
Q2. Are there any money transfer credit cards in India?
Ans: Since credit is not easily available in India, Indian banks offer balance transfer cards and not money transfer credit cards. SBI, Axis bank and some other banks allow a balance transfer from one credit card to the other at a 0% interest rate.
Q3. What is the difference between balance transfer and money transfer credit cards?
Ans: The money transfer credit card allows you to transfer cash to your current account to pay off your overdraft or other debts. However, a balance transfer card only allows you to transfer debts from one credit card to another.
Q4: Can I use PayTM without filling in KYC form?
Ans: No, Filling in KYC form has become mandatory after KYC norms were laid out by RBI. The easiest way to do it yourself is linking your Aadhar to PayTM.
Q5. Are there any limits that one has to adhere to in PayTM or PayZapp while transferring money?
Ans: With PayZapp you can transfer INR 20000 monthly and INR 5000 per day. Additionally, PayTM users can do transactions of higher amounts. Nevertheless, there are some specified limits. This limit applies to minimum KYC(INR20,000) wallet while Full KYC(INR1 lakh) wallet users can transfer up to INR 25,000 per month. The minimum amount to send to the bank is INR100. You can only send INR 5000 per transaction.
Note: The purpose of writing this article is to help users understand the pros and cons of transferring money from credit cards for their needs. We do not encourage misuse and mismanagement of credit.