Looking to make a big purchase, or simply pay off an overdraft or existing debt?
A money transfer credit card, also known as a “super balance-transfer card” or cash-advance card, lets you move money from the card to your bank account.
Most credit cards don’t allow you transfer money directly into a current account. Whereas money transfer cards are specifically designed for this, and charge a special promotional interest rate. They typically also have a balance transfer offer, so you can make a transfer to pay off other cards, as well as move money into a current account.
Some money transfer cards may come with 0% promotional periods. This means you avoid paying any interest on the amount borrowed – as long as you stay on top of the minimum monthly repayments. However, they do usually include a transfer fee for moving money from the card (usually around 4%).
For example, if you wanted to move a balance of £2,000, the transfer fee would mean an additional £80 is added to the outstanding balance of the card. But with many overdrafts now charging over 18% APR, the amount saved on overdraft fees could outweigh any transfer fees.
You can find out more by reading our article about money transfer cards
What are the pros of this card type?
- Save yourself overdraft fees - if your bank account needs a boost to lift you out of an expensive overdraft, a money transfer card could be the solution. The credit limit of the card will depend on your individual circumstances, but could work for you as a low-cost-loan for a purchase. Or it could be a way to get your bank balance back in the black, often even when you take the handling fees into account. Remember though, any outstanding balance at the end of the interest free period will be charged interest at the card's standard interest rate.
- Planning a large purchase - the card balance needn’t be used just to cover a bank balance. If you’re planning a large purchase or need access to a cash lump sum, you could transfer money from the card to meet these needs.
- Could be cheaper than a loan - with some cards offering lengthy 0% periods, it may work out cheaper than taking out a personal loan which charges interest right from the start. However, you should be mindful to pay the card balance before any promotional period ends. Otherwise you could end up paying typical representative annual percentage rates (APR), which could be much higher than any personal loan rate you may get.
What are the cons of this card type?
- Consider your credit rating - money transfer cards are designed for those with good credit history. So if you’re thinking of applying, your credit history will need to be in good shape in order to qualify for the best money transfer deals.
- How much you can borrow - the amount you can borrow will depend on your personal circumstances. If you’re planning on using the card to cover outstanding debts, you should consider that your credit limit may not cover the full amount.