How to Send Money with a Credit Card

With the rapid decline of the use of physical cash for payment, credit cards have become one of the most popular payment methods in Canada. Most Canadians now prefer to send money from a credit card directly to their account to pay for services or send money to family or friends overseas. However, there are several methods to achieve this, leaving many confused about the best option for them.

This article will guide you through all you need to know on how to send money with a credit card.

How Can I Send Money From a Credit Card to a Bank Account

So, how can you send money with a credit card? Here are some of the most common ways you can send money to another person using your credit card:

• Get a cash advance
• Wire money from your credit card
• Use a payments app
• Credit card loans
• Redeem cash back

1. Get a cash advance

A credit card cash advance is simply a short-term loan that you can take against your credit limit. Essentially, you can access cash by withdrawing it from an ATM using your credit card, just like you’d do for your debit card. Also, you can withdraw cash with the use of a teller at your bank branch or just use cheques provided to you by your credit card issuer.

Cash advances are primarily a very quick and easy way you can access the money you need, however, they can be expensive. You may need to pay for your cash advance fee along with an ATM fee. Moreover, interest will begin to accrue the instant you receive the cash from your credit card, and most cards charge a high-interest rate for cash advances loans.

Note that the total amount of money you can withdraw using cash advance is limited as well. Cash advance amount limits are usually lower than the total credit limit on the card. For instance, if your credit card's credit limit is $6,000, its cash advance limit may be just $3,000.

Lastly, the convenience of having a cash advance always comes at a cost. Card issuers generally charge a 5% cash advance fee.

2. Wire money from your credit card

You can also decide to use a credit card to fund a wire transfer, however, your card issuer may still consider it as a cash advance. Essentially, this implies you’ll have to pay a cash advance fee and also a higher interest rate. Also, you’ll be liable to pay a standard wire transfer fee.

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3. Use a payment app

Another way to send money with a credit card is to simply link the card to your account in any authorized payment app and use it for transfer. By doing this you would be able to transfer money to other people, just like you would do with your real bank account. However, you may have to pay extra fees when your credit card is the financing source.

For example, you may wish to find your SanaTransfer account via your credit card and then send money home to friends and family.

4. Credit card loans

Some credit card issuers offer their customers less expensive ways to borrow loans against their credit limit. You can use this method to help you get the cash you need. Essentially, there are some credit card loan programs that allow you to access loans at a fixed rate which you easily pay back over a specific c period of time.

The best part of this offer is that you won’t have to fill out a separate loan application form or be mandated to pay for a credit cheque or fees. Accessing a loan through this method will just take a few steps when you’re signed into your account on the issuer’s app or on the web.

5. Redeem cash back

When you use cash-back credit cards, you earn a specific percentage back on any purchases you make. For instance, using a cashback card that offers you 3% on all purchases will get you $3 back on every $100 you spend. The card issuer generally adds cash back directly to your rewards balance.

If you already have a cashback credit card and thinking of how to send the reward directly to your account, it's a direct process. Just do this:

• Sign in to your credit card account and navigate to the rewards page. Alternatively, you can call your card issuer using the number written on the back of your credit card. Once you sign in, move on to the next steps.

The different ways you can redeem your cash back largely depend on your card issuer. Most of the card issuers will give you these options:

• Use the cashback to get a statement credit on your credit card bill
• Get a cheque in the mail to redeem your cash back
• Make a deposit directly into your bank account to redeem your cashback.

Select your preferred option on the rewards page of your credit card account and it will be automatically used to redeem your reward.

Sending Money From Your Credit Card to A Bank Account

If you wish to send money abroad, you have to first fund your SanaTransfer. Follow the steps below:

1. First, download the SanaTransfer app on your Smartphone. This app is available on both Android and iOS stores.

2. Next, create an account for free and complete your KYC Verification.

3. Navigate to "Fund Wallet" on your dashboard and Fund your account by sending money from your banking app to ca@sanatransfer.com.

4. Select "Send Money" and follow the prompt to send money to the bank account of your choosing.

Read this detailed guide for the steps on how to send money on SanaTransfer

Will Sending Money From a Credit Card Affect Your Credit Score?

When you send money with a credit card, it can affect your credit score negatively if you use a cash advance or balance transfer and fail to pay back the loan on time.

However, if you pay back the loan on time and in full, it can positively affect your credit score in the long term. Note that any small change in your credit balance can affect your credit score, for instance, if you dabble into your overdraft.

What are the Advantages and Disadvantages of Transferring Money With a Credit Card?

Although transferring cash with a credit card is extremely convenient and has advantages, it also poses some disadvantages. Here is a list of the advantages and disadvantages:

Advantages

• It is typically a fast and straightforward process.

• It can be accomplished in numerous ways, including in person or online, so it is a great way to settle financial emergencies.

• It can positively impact your credit score if you reimburse your credit card loan back on time.

Disadvantages

• It can have a negative impact on your credit score if it’s cash you don’t have and you don't pay the loan back on time.

• If borrowing a loan from your credit card, you will immediately begin to accrue interest.

• Balance transfers can attract extra fees.

• If you’re not very careful, transferring money with a credit card will become a habit and lead to further debt.

Final Thoughts

If you didn't know how to send money with a credit card, this guide must have taught you a lot about the process. Of all the different ways to send money with credit cards, we recommend that you use only cash back on a regular basis.

This is because the other options listed above all attract extra fees, and if you are unable to pay off the fund you borrowed, you'll dive into credit card debt. Credit card debts can negatively affect your credit score, which can ruin your finances. So it is good to understand how cashback works in case you need to obtain cash from your credit card.

SanaTransfer offers easy, fast and secure payment services with better rates and faster payouts for international remittance. Sign up now to get started.

Download the app for Android or iOS.